If the owner of the firm, shown above is a profit maximizer, the firm should ______ in the short run.
A)continue to operate at the existing output
B)shutdown
C)expand output to lower costs
D)More data is needed to say definitively what the firm should do.

Question

Quizplus · Accepted Answer

If the owner of the firm is a profit maximizer and is currently operating at a positive level of profit, the firm should continue to operate at the existing output in the short run. This is because shutting down would result in a loss of revenue and expanding output would entail additional costs, which may not necessarily result in higher profits in the short run.

If the Owner of the Firm, Shown Above Is a Profit