-Assume that the firm described in Table 6.1 is incurring a loss at the profit-maximizing output level. In the long run, the firm will
A) produce more than the profit-maximizing output level.
B) go out of business.
C) increase the price of its product.
D) produce at the profit-maximizing output level if the price exceeds average fixed cost.
E) produce at the profit-maximizing output level if the price exceeds average variable cost.

Question

-Assume that the firm described in Table 6.1 is incurring a loss at the profit-maximizing output level. In the long run, the firm will
A) produce more than the profit-maximizing output level. 
B) go out of business. 
C) increase the price of its product. 
D) produce at the profit-maximizing output level if the price exceeds average fixed cost. 
E) produce at the profit-maximizing output level if the price exceeds average variable cost.

Quizplus · Accepted Answer

In the long run, if a firm is incurring losses at the profit-maximizing output level, it cannot sustain its operations indefinitely. Without the ability to cover its costs, including both fixed and variable costs, the firm will eventually go out of business.

-Assume That the Firm Described in Table 6