A certain competitive firm sells its output for $20 per unit. The 50th unit of output that the firm produces has a marginal cost of $22. Production of the 50th unit of output does not necessarily
A)increase the firm's total revenue by $20.
B)increase the firm's total cost by $22.
C)decrease the firm's profit by $2.
D)increase the firm's average variable cost by $0.44.

Question

Quizplus · Accepted Answer

The production of the 50th unit increases total revenue by $20 and total cost by $22, decreasing profit by $2. However, it does not necessarily increase average variable cost by $0.44, as this depends on the total number of units produced and the total variable cost.

A Certain Competitive Firm Sells Its Output for $20 Per