A firm producing positive amount gains by increasing its production. Whether it is true or false?

As the firm is producing a positive amount, it means the firm is running in profit.

There are two type of costs of the firm, fixed cost and variable cost. A firm making a profit means its marginal cost of prouction is less than or equal to the price, it charges in the market.

As the fixed cost of the firm decreases, although cost of production comes down and profits will go up, as there is no change in marginal cost of production, which depends more on variable cost of production provided its fullcaacity is not reached.

Hence, firm does not gain by increasing production and hence will not produce more.

True. This statement reflects the law of diminishing marginal returns, which states that as a firm increases its production of a good or service, the additional output gained from each additional unit of input will eventually decrease. However, this does not mean that the firm will not gain positively from increasing its production. In the short run, increasing production may still lead to positive gains, but at a diminishing rate. In the long run, other factors such as technology, economies of scale, and market conditions come into play, influencing the firm's ability to continue gaining positively from production increases.