In response to a decrease in the market demand, to maximize short- run profits, managers of perfectly competitive firms will decrease production by employing fewer fixed inputs.

Question

Quizplus · Accepted Answer

In the short run, perfectly competitive firms cannot adjust their fixed inputs, only their variable inputs, to respond to changes in market demand. Fixed inputs are by definition unchangeable in the short run.

In Response to a Decrease in the Market Demand, to Maximize