The Figure Given Below Represents a Firm in a Market

question 11

Multiple Choice

The figure given below represents a firm in a market characterized by many buyers and one seller.MC represents the marginal cost, MR the marginal revenue, and D the demand curve of a firm.The firm is initially in equilibrium producing 6 units of output at a price of $10 per unit.


-Refer to Figure .Suppose the adoption of a new cost saving technology lowers marginal cost by $2 although the buyer's valuation remains unchanged.This allows the firm to produce 8 units of output at a price of $8 per unit.The profit earned by the firm will:

• A)increase by $10.
• B)decrease by $5.
• C)remain unchanged.
• D)increase by $5.

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