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Suppose a profit-maximizing firm has experienced a $100 decrease in its fixed costs. This change, everything else held constant, has caused _____ in the firm's marginal cost.

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Assuming that the fixed cost is the only factor that has changed, the decrease in fixed cost would not cause any change in the marginal cost of the firm.

Marginal cost is the additional cost incurred by the firm to produce one more unit of output. It is calculated as the change in total cost when the output increases by one unit. Since the decrease in fixed cost does not affect the variable costs of producing each unit of output, it does not directly impact the marginal cost.

However, the decrease in fixed cost could potentially affect the average cost of production. If the fixed cost reduction leads to an increase in the production output, the average cost per unit would decrease, as the fixed cost is spread over a larger number of units. This could potentially lead to an increase in the firm's profits.

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User David Holbrook
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