A Certain Competitive Firm Sells Its Output for $20 Per

question 550

Multiple Choice

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.

---

Definitions:

Inventory

The total amount of goods available for sale or use by a business.

Perpetual Inventory System

An accounting method that records inventory purchases or sales immediately through the use of computerized point-of-sale systems and enterprise asset management software.

FIFO Inventory

An inventory valuation method that assumes goods are sold in the order in which they were acquired, with the oldest inventory items sold first.

Inventory Balance

The total value of all the goods that a company has in stock at any given time.