Right Panel: The market: a shift of short-run supply in response to an increase in demand.
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the firm is
A) making zero economic profit,so it should neither expand nor contract.
B) making zero economic profit,so it should shut down.
C) making zero economic profit,so it should contract.
D) making zero economic profit,so it should expand.
E) making zero economic profit,so it should raise its price.

Question

Right Panel: The market: a shift of short-run supply in response to an increase in demand. 
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the firm is
A) making zero economic profit,so it should neither expand nor contract. 
B) making zero economic profit,so it should shut down. 
C) making zero economic profit,so it should contract. 
D) making zero economic profit,so it should expand. 
E) making zero economic profit,so it should raise its price.

Quizplus · Accepted Answer

The firm is currently producing and selling at the equilibrium point where market demand intersects with short-run supply. Since it is making zero economic profit, it should neither expand nor contract production.

Right Panel: the Market: a Shift of Short-Run Supply in Response