When a firm's fixed costs increase it should raise its prices in order to maximize profits.

Question

Quizplus · Accepted Answer

When a firm's fixed costs increase, it does not necessarily mean that it should raise its prices. The optimal pricing strategy should be based on a variety of factors including the existing market conditions, competition, and customer demand. In some cases, a firm may choose to absorb the increased fixed costs and maintain the same price, or it may explore cost-cutting measures in order to maintain profitability without raising prices.

When a Firm's Fixed Costs Increase It Should Raise Its