If a perfectly competitive firm is producing at its profit-maximizing output in the short run and fixed costs decline,the firm should
A)Use less capital but increase output by hiring more labor.
B)Not change output.
C)Reduce output.

Question

Quizplus · Accepted Answer

In the short run, fixed costs cannot be changed. Therefore, a decline in fixed costs would not affect the profit-maximizing output level. The firm should continue producing at its original level to maximize profits.

If a Perfectly Competitive Firm Is Producing at Its Profit-Maximizing