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Assumes that firm did not maximize its profit before change

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Reference no: EM13894626

The answer depends of which assumptions we make.

· If we assume that the firm always chooses an efficient production, then it is impossible that more units would cost less. That follows directly from the definition of efficient. If it was cheaper to produce 100 units of the good than 90 units, one could easily decrease the cost of producing 90 units by instead producing 100 and then throw away 10 units.

· If the firm has not chosen an efficient production, it is sometimes possible to produce more of the good at a lower cost. However, that assumes that the firm did not maximize its profit before the change.

· The firm can often lower its cost in the long run, as compared to the short run.

Reference no: EM13894626

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