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A Perfectly Competitive Firm Is Earning an Economic Profit When

Question 35

Multiple Choice

A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will


A) continue producing the same quantity as before and continue making the same economic profit as before.
B) produce less output to decrease total costs.
C) charge a higher price.
D) produce more output so the extra revenue will cover the increased costs.
E) continue producing the same quantity as before but will make less economic profit.

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