Use the following to answer questions :
Figure 8-1
-If the market price increases to $15, the firm depicted in Figure 8-1 will:
A)shutdown.
B)earn economic profits.
C)produce more than 10 units of output.
D)produce less than 10 units of output.
E)both B and C are correct.

Question

Use the following to answer questions :
Figure 8-1 
-If the market price increases to $15, the firm depicted in Figure 8-1 will:
A)shutdown. 
B)earn economic profits. 
C)produce more than 10 units of output. 
D)produce less than 10 units of output. 
E)both B and C are correct.

Quizplus · Accepted Answer

When the market price increases to $15, the firm will respond by producing more than 10 units of output to take advantage of the higher price, which can lead to earning economic profits. This is because the higher price likely exceeds the firm's average total cost at its previous output level, providing an incentive to increase production.

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