The question is: Your firm is considering increasing production by 1000 units. This change will make your price fall to $3 a unit.

The question is: Your firm is considering increasing production by 1000 units. This change will make your price fall to $3 a unit. These additional units will cost the firm $2800 in variable cost (total) but can be produced in the existing factory because you are below capacity. Without this change, your firm will lose $50,000 this year. Should you increase your production? Explain.