If the price of a firm's product rose faster than the overall pace of inflation, then you would expect to see that firm's output
A) increase.
B) decrease.
C) remain unchanged.
D) move steadily in a direction dictated by circumstances not described in this question.
E) move erratically around a predetermined target whose specification would be unaffected by general inflation.

Question

Quizplus · Accepted Answer

If the firm's product price rises faster than inflation, the firm's product becomes relatively more expensive compared to others, potentially increasing its profitability and incentivizing the firm to increase output to capitalize on higher prices.

If the Price of a Firm's Product Rose Faster Than