A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the unit for $6. The firm should produce more than 100 units in order to maximize its profits (or minimize its losses).

Question

Quizplus · Accepted Answer

Producing the 100th unit adds more to revenue ($6) than to costs ($5), indicating that the marginal revenue exceeds the marginal cost at this level of output, suggesting that increasing production could lead to higher profits.

A Firm Is Currently Producing 100 Units of Output Per