The Speedy Typesetting Company, a Perfectly Competitive Firm, Is Currently

question 139

Multiple Choice

The Speedy Typesetting Company, a perfectly competitive firm, is currently producing where P = MC and is earning a normal profit. The firm mainly employs minimum wage workers and the government just increased the minimum wage from $5.85 to $6.55 per hour. In the short run, this firm will most likely

• A) reduce the amount of output it produces because its cost curves have shifted up and to the left.
• B) continue to produce the same amount of output because only its fixed costs have increased.
• C) produce more units of output to increase revenue to cover the additional fixed costs.
• D) shut down because it will no longer be earning a normal profit.

---

Definitions:

Service Company

A business that provides intangible products, such as services or expertise, rather than physical goods.

Cost Formula

An equation used to calculate the total cost of production, involving fixed and variable components.

Vehicle Operating Cost

refers to the expenses associated with using a vehicle, including fuel, maintenance, insurance, and depreciation.

Cost Formula

An equation used to determine the total cost of production, incorporating variable and fixed costs.