In Figure 17-4,below,initial demand,marginal cost,and marginal revenue curves (none of them shown)caused the firm to produce the profit-maximizing quantity Y₀ at a price of P₀.Now the demand and marginal cost curves have moved to those shown,with the marginal revenue curve running through point L.
Figure 17-4

-In Figure 17-4 above,the profit-maximizing quantity,in the absence of "menu costs," ________,with profit equal to ________.
A)remains Y₀,J + K
B)remains Y₀,H + K
C)remains Y₀,G + H + J + K
D)falls to Y₁,G + J
E)falls to Y₁,F + G + J

Question

In Figure 17-4,below,initial demand,marginal cost,and marginal revenue curves (none of them shown)caused the firm to produce the profit-maximizing quantity Y₀ at a price of P₀.Now the demand and marginal cost curves have moved to those shown,with the marginal revenue curve running through point L.
Figure 17-4
 
-In Figure 17-4 above,the profit-maximizing quantity,in the absence of "menu costs," ________,with profit equal to ________.
A)remains Y₀,J + K 
B)remains Y₀,H + K 
C)remains Y₀,G + H + J + K 
D)falls to Y₁,G + J 
E)falls to Y₁,F + G + J

Quizplus · Accepted Answer

In the absence of "menu costs," the profit-maximizing quantity remains at Y₀, with profit equal to J + K, as there are no additional costs to changing prices.

In Figure 17-4,below,initial Demand,marginal Cost,and Marginal Revenue Curves (None of Them