9. (Figure 9.6) What happens to the profit-maximizing price and quantity followi
ID: 1122827 • Letter: 9
Question
9. (Figure 9.6) What happens to the profit-maximizing price and quantity following the change in the demand curve from Di to D2? Price (S) 10- 4 MC MR 0 1 2 3 4 5 6 7 8 9 10 Quantity O The price falls from $5 to approximately s4, and the output increases from 300 to approximately 333 units O The price rises from $5 to approximately s5.75, and the output decreases from 300 to approximately 250 units The price falls from s4.50 to $3, and the output increases from 300 to 500 units The price rises from approximately s4 to $5, and the output remains unchanged at 300 units.Explanation / Answer
d> is the correct option
Reason
The maximum profit condition is where MC meets MR. Since there is no change in the MC and MR curve, the output will not change but the price will rise as in the new demand curve, the correspondin price is higher.
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