Question

Winona's Fudge Shoppe is maximizing profits by producing 1,000 pounds of fudge per day. If Winona's fixed costs unexpectedly increase and the market price remains constant, then the short run profit-maximizing level of output
a. is less than 1,000 pounds.
b. is still 1,000 pounds.
c. is more than 1,000 pounds
d. becomes zero.

Answer 1

Answer:

b. is still 1,000 pounds.

Explanation:

profit-maximising level of output is found where marginal cost = marginal revenue

if fixed cost increases, the marginal cost still remains unchanged. so, the profit-maximizing level of output remains unchanged