A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price rises to $25, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, itsa. quantity of output is higher than it was previously. b. average total cost is higher than it was previously. c. marginal revenue is higher than it was previously. d. All of the above are correct.

Question

Aidyn Turner

Business

23 March, 10:05

A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price rises to $25, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, itsa. quantity of output is higher than it was previously. b. average total cost is higher than it was previously. c. marginal revenue is higher than it was previously. d. All of the above are correct.

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Duran · Answer 1

The answer is: A) quantity of output is higher than it was previously.

Explanation:

The Law of Supply states that, all other factors remaining equal, as the price of a product or service increases, the quantity of products or services offered by suppliers will increase, and vice versa.

In other words, if the price of a good increases, suppliers will try to maximize their profit by offering more goods.