A firm produces widgets and experiences diminishing returns after a certain level of production. If the fixed costs of production are $1000 and the marginal revenue from selling an additional widget is $50, how will this affect the firm's profit as production increases beyond the point of diminishing returns?

When a firm produces widgets, it starts with increasing returns, meaning each additional widget adds more to profit. However, after reaching a certain production level, the firm experiences diminishing returns, where each extra widget contributes less to profit than before. In this case, the fixed costs are $1000, and the marginal revenue from selling one more widget is $50. If the cost of producing each additional widget becomes higher than $50 due to diminishing returns, the firm will start losing money on those extra widgets. For example, if it costs $60 to produce an additional widget, the firm would lose $10 for each extra widget sold, negatively impacting overall profit as production increases.