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Firms use cost data to make decisions about how many units to produce based on their ___________ costs. Increasing production may not always lead to an increase in profit. Increasing production will cause a firm’s _________ costs to increase, which could outweigh any benefits that were previously gained by lowering their overhead—which is determined by their ________- costs in the short run.

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Fixed and Variable costs.

The reason firms do not always increase their production is based on the following factors:

1. Fixed and Variable costs: The fixed and variable costs are used to decide the number of goods to produce.

2. Average Fixed costs: When a firm increases its production, the average fixed costs may increase.

3. Fixed costs: The overhead cost is the fixed costs in the short run.

Thus, each of the three blanks is filled with the correct answer.  Note that the every business entity incurs both fixed and variable costs.

In order to maximize profit, the firm should produce where its marginal revenue and marginal cost are equal. The firm's marginal cost of production is $20 for each unit. When the firm produces 4 units, its marginal revenue is $20. Thus, the firm should produce 4 units of output.

Learn more about Fixed and Variable costs at

https://brainly.com/question/8225307

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