suppose that the 2009 price forecast is drastically revised downward to $5.
-What is Bartech's profit-maximizing (or loss-minimizing) output for 2009?
A) 0 units
B) 1,000 units
C) 2,000 units
D) 3,000 units
E) 4,000 units

Question

Quizplus · Accepted Answer

Without specific details on costs, demand, or the structure of Bartech's market, the general principle in economics is that if the price falls below the variable cost of production, the profit-maximizing (or loss-minimizing) output is to produce nothing, i.e., 0 units. This minimizes losses by avoiding the production of goods that would be sold at a loss.

Suppose That the 2009 Price Forecast Is Drastically Revised Downward