A firm in competitive price-taker market is maximizing profit at Q = 3,000. Then its fixed cost increases. The profit-maximizing output is now
A) greater than 3,000 and profit decreases
B) less than 3,000 and profit decreases
C) greater than 3,000 and profit is unchanged
D) equal to 3,000 and profit decreases
E) equal to 3,000 and profit increases

Question

Quizplus · Accepted Answer

In a competitive price-taker market, fixed costs do not affect the profit-maximizing output level. Therefore, the output remains at 3,000, but the increase in fixed costs will decrease the firm's profit.

A Firm in Competitive Price-Taker Market Is Maximizing Profit at Q