For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the
A)production of the 100th unit of output increases the firm's profit by $1.
B)production of the 100th unit of output increases the firm's average total cost by $1.
C)firm's profit-maximizing level of output is less than 100 units.
D)production of the 101st unit of output must increase the firm's profit by more than $1.

Question

Quizplus · Accepted Answer

The production of the 100th unit of output increases the firm's profit by the difference between the marginal revenue ($11) and the marginal cost ($10), which is $1. This is because profit increases by the amount that revenue exceeds cost for each additional unit produced.

For a Certain Firm, the 100th Unit of Output That