Question

A firm with high fixed costs and low variable costs should be more willing than a firm with low fixed costs and high variable costs to do which of the following?

		Lower price, even if additional marginal revenue is low
		Lower price as long at total revenue increases, even if marginal revenue is negative
		Raise price, even if there is some loss in total revenue
		Raise price, as long as marginal revenue is positive

Answer 1

Answer:

A firm with high fixed costs and low variable costs should be more willing than a firm with low fixed costs and high variable costs to do the following:

Lower price as long at total revenue increases, even if marginal revenue is negative

because when fixed cost are covered the and total revenue increases after the break even point it will earn profit