The graph below depicts the cost structure for a firm in a competitive market. Figure 9-13 -Refer to Figure 9-13. When price rises from P₃ to P₄, the firm finds that A) fixed costs are lower at a production level of Q₄. B) it can earn a positive profit by increasing production to Q₄. C) profit is still maximized at a production level of Q₃. D) average revenue exceeds marginal revenue at a production level of Q₄.

Question

Quizplus · Accepted Answer

When the price rises from P3 to P4, the firm can increase production to Q4 and earn a positive profit, as the higher price allows for covering costs and generating profit.

The Graph Below Depicts the Cost Structure for a Firm