If a Firm Is Currently in Short-Run Equilibrium Earning a Profit,what

question 25

Multiple Choice

If a firm is currently in short-run equilibrium earning a profit,what impact will a lump-sum tax have on its production decision?

• A) The firm will decrease output to earn a higher profit.
• B) The firm will increase output but earn a lower profit.
• C) The firm will not change output but earn a lower profit.
• D) The firm will not change output and earn a higher profit.

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Definitions:

Deductive Reasoning

A logical process in which a conclusion follows from specific premises, assuming those premises are true.

Top-Down Reasoning

An analytical approach where the general or bigger picture is considered first, followed by the specific details.

Descriptive Reasoning

The process of making inferences or conclusions based on observed patterns or descriptions without necessarily understanding the mechanisms.

Algorithm

An algorithm is a detailed, step-by-step procedure or formula for solving a problem or completing a task, often used in computing and mathematical processes.