Figure 10.5 Figure 10.5 Shows Cost and Demand Curves Facing a Typical

question 46

Multiple Choice

Figure 10.5

Figure 10.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 10.5.The figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens to its profit-maximizing output level?

• A)It increases.
• B)It decreases.
• C)It remains the same.
• D)It could increase, decrease or remain constant, depending on whether the firm is able to cut costs somewhere else.

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