If a competitive firm is in short-run equilibrium,then
A) profits equal zero.
B) it will not operate at a loss.
C) an increase in its fixed cost will have no effect on profit.
D) an increase in its fixed cost will have no effect on output.

Question

Quizplus · Accepted Answer

In the short run, a competitive firm's decision to produce does not depend on its fixed costs because these costs are incurred regardless of the level of output. Therefore, an increase in fixed costs does not affect the firm's output decision in the short run, as the firm focuses on covering its variable costs and making decisions based on marginal costs and revenues.

If a Competitive Firm Is in Short-Run Equilibrium,then