Figure 85 Figure 8

question 240

Multiple Choice

Figure 8.5 Figure 8.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 8.5.The figure shows the cost structure of a firm in a perfectly competitive market.If the firm's fixed cost increases by $1000 due to a new environmental regulation, what happens to its profit-maximising 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.