-In the above figure, what happens to the firm's optimal level of output if the price it receives for its product increases from P2 to P3?

Question

Quizplus · Accepted Answer

When the price a firm receives for its product increases from P2 to P3, the firm's optimal level of output increases. This is because, in general, firms are motivated to produce more when they can sell their product at a higher price, assuming costs remain constant. This is a basic principle of supply in economics, where higher prices lead to an increase in the quantity supplied.

-In the Above Figure, What Happens to the Firm's Optimal