-In the above figure, if the firm is producing Q₁ units at a price P₁, the firm should A) increase output and decrease price. B) decrease output and increase price. C) not change output or price. D) shut down.

Question

Quizplus · Accepted Answer

If the firm is producing at Q1 and P1, it is likely not maximizing profit. By increasing output and decreasing price, the firm can move towards a more optimal point on the demand curve where marginal cost equals marginal revenue, potentially increasing profit.

-In the Above Figure, If the Firm Is Producing Q1

-In the Above Figure, If the Firm Is Producing Q₁