Author Question: Refer to Figure 12-5. The figure shows the cost structure of a firm in a perfectly competitive ... (Read 346 times)

newyorker26 · **on:** Jun 29, 2018

Refer to Figure 12-5. The figure shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by 1,000 due to a new environmental regulation, what happens to its profit-maximizing output level?

A) It remains the same.
B) It decreases.
C) It increases.
D) It could increase, decrease, or remain constant, depending on whether the firm is able to cut costs somewhere else.

Question 2

Refer to Figure 13-11. The firm represented in the diagram

A) makes zero economic profit.
B) should exit the industry.
C) makes zero accounting profit.
D) should expand its output to take advantage of economies of scale.