Suppose the firm is currently producing Q2 units What happen

Suppose the firm is currently producing Q2 units. What happens

if it expands output to Q3 units?

a. It will be moving toward its profit-maximizing output.

b. It makes less profit.

c. It incurs a loss.

d. Its profit increases by the size of the vertical distance df.

Solution

Suppose the firm is currently producing Q2 units. What happensif it expands output to Q3 units?

b. It makes less profit.