FIGURE 9-1
-Refer to Figure 9-1. The diagram shows cost curves for a perfectly competitive firm. If the market price is P1, the profit-maximizing firm in the short run should
A) produce output A.
B) produce output B.
C) produce output C.
D) produce output D or shut down as it doesnʹt really matter which.
E) definitely shut down.

Question

FIGURE 9-1
-Refer to Figure 9-1. The diagram shows cost curves for a perfectly competitive firm. If the market price is P1, the profit-maximizing firm in the short run should
A) produce output A. 
B) produce output B. 
C) produce output C. 
D) produce output D or shut down as it doesnʹt really matter which. 
E) definitely shut down.

Quizplus · Accepted Answer

The profit-maximizing firm in the short run will produce output D or shut down as it doesn't really matter which. At output D, the firm is making zero economic profit, which is the best it can do in the short run when the market price is P1.

FIGURE 9-1 -Refer to Figure 9-1. the Diagram Shows Cost Curves for Curves