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Because of a city tax reduction, the total fixed cost a firm must pay is reduced by $500 monthly. The firm operates in conditions of
Because of a city tax reduction, the total fixed cost a firm must pay is reduced by $500 monthly. The firm operates in conditions of perfect competition. If the firm seeks to maximize its profit, this cost reduction should (at least in the short run) result in:
- a reduction in price
- an increase in output
- an increase in price
- a reduction in output
- no change in output or in price
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