Suppose you manage a small firm. Two management consultants offer the following

Suppose you manage a small firm. Two management consultants offer the following advice.
The first says that your firm is losing money on every unit that you produce. In order to
reduce your losses the consultant recommends that you cut back production. The second
consultant says that if your firm sells another unit the price will more than cover your
increase in costs. In order to reduce your losses the second consultant recommends that you
should increase production.
a. As an economist can you explain why both facts that the consultants rely on could be
correct.
b. Which consultant is offering the correct advice? Explain why.