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). a. TRUE b. FALSE

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Business

Arellano

4 March, 05:28

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). a. TRUE b. FALSE

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Answers (1)

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Blimpie · Answer 1

The correct answer is a) TRUE

Explanation:

The exercise reports that the cost of producing the unit is $5 and the sells price is $6. This means that if you increase production, the earns will increase too.

However, keep in mind that the exercise doesn't specify the fixed cost and variable cost, just say "production cost". If the exercise specified the fixed cost, probably the answer would change