In Figure 17-4, below, initial demand, marginal cost, and marginal revenue curves (none of them shown) caused the firm to produce the profit-maximizing quantity Y 0 at a price of P0. Now the demand and marginal cost curves have moved to those shown, with the marginal revenue curve running through point L.
Figure 17-4
-If the firm in the figure above maintains its set price of P0, rather than dropping price to P1, this reduces its profit by
A) K - G.
B) K + G.
C) G - K.
D) G + H.
E) G.

Question

In Figure 17-4, below, initial demand, marginal cost, and marginal revenue curves (none of them shown) caused the firm to produce the profit-maximizing quantity Y 0 at a price of P0. Now the demand and marginal cost curves have moved to those shown, with the marginal revenue curve running through point L.
Figure 17-4 
-If the firm in the figure above maintains its set price of P0, rather than dropping price to P1, this reduces its profit by
A) K - G. 
B) K + G. 
C) G - K. 
D) G + H. 
E) G.

Quizplus · Accepted Answer

The Answer of In Figure 17-4, below, initial demand, marginal cost, and marginal revenue curves (none of them shown) caused the firm to produce the profit-maximizing quantity Y 0 at a price of P0. Now the demand and marginal cost curves have moved to those shown, with the marginal revenue curve running through point L.
Figure 17-4 
-If the firm in the figure above maintains its set price of P0, rather than dropping price to P1, this reduces its profit by
A) K - G. 
B) K + G. 
C) G - K. 
D) G + H. 
E) G.

In Figure 17-4, Below, Initial Demand, Marginal Cost, and Marginal