If a profit-maximizing firm's fixed cost of producing widgets falls,
A)its total cost curve is unaffected.
B)its marginal cost curve shifts down.
C)the firm will produce more widgets.
D)the firm's average profit per widget produced rises.

Question

Quizplus · Accepted Answer

A decrease in fixed costs does not affect marginal costs or production levels but increases average profit per widget as total costs decrease.

If a Profit-Maximizing Firm's Fixed Cost of Producing Widgets Falls