In the short run, fixed costs for a profitable competitive firm are
A) zero.
B) negative.
C) important determinants of the output level.
D) irrelevant in determining the optimal level of output.

Question

Quizplus · Accepted Answer

In the short run, fixed costs are irrelevant in determining the optimal level of output for a profitable competitive firm. This is because the firm will produce where marginal cost equals marginal revenue, regardless of the level of fixed costs. Fixed costs only become relevant in the long run, when the firm can adjust their capital and technology to minimize those costs.

In the Short Run, Fixed Costs for a Profitable Competitive