Figure 6.2 -Figure 6.2 Shows the Cost Structure of a Firm in Firm

Figure 6.2
-Figure 6.2 shows the cost structure of a firm in a perfectly competitive market. Suppose the current market price is $10 and the firm produces the profit maximizing output level. If the firmʹs total fixed cost increases due to a new government regulation, the short-run response of the firm should be to: Note: since the question does not restrict the firmʹs response to the short-run, we canʹt rule out that the rise in fixed cost will push the firm below the breakeven point and that the firm will exit the industry in the long run, thus decreasing its current output level.

A) produce its current output level.
B) increase its current output level.
C) decrease its current output level.
D) There is not sufficient information.