If fixed cost rises,
A)the profit-maximizing level of output would decrease.
B)the profit-maximizing level of output would not change.
C)marginal cost rises.
D)variable cost falls.

Question

Quizplus · Accepted Answer

The profit-maximizing level of output is determined by the point where marginal cost equals marginal revenue, which is not directly affected by changes in fixed costs. Fixed costs do not vary with the level of output, so they do not influence the decision about the quantity to produce for profit maximization.

If Fixed Cost Rises