Your firm produces its goods at an average unit production cost of Currently, the firm sells 24 units at a price of $8 a unit. What is the marginal net benefit to the firm of selling
1 more unit, assuming the unit selling price remains unchanged? Round your answer to the
Nearest cent.
A)$8.00
B)$5.98
C)$5.60
D)$2.38

Question

Your firm produces its goods at an average unit production cost of  Currently, the firm sells 24 units at a price of $8 a unit. What is the marginal net benefit to the firm of selling
1 more unit, assuming the unit selling price remains unchanged? Round your answer to the
Nearest cent.
A)$8.00 
B)$5.98 
C)$5.60 
D)$2.38

Quizplus · Accepted Answer

To calculate marginal net benefit, we need to find the change in total revenue and change in total cost from selling one more unit.

Change in total revenue = selling price of one unit = $8
Change in total cost = average unit production cost = $11.17

Marginal net benefit = Change in total revenue - Change in total cost
Marginal net benefit = $8 - $11.17 = -$3.17

A negative marginal net benefit means that selling one more unit would result in a loss for the firm. Therefore, the best choice for the firm would be to not sell one more unit as it would result in a loss.

Your Firm Produces Its Goods at an Average Unit Production