Ronny’s Pizza House operates in the perfectly competitive local pizza
Ronny’s Pizza House operates in the perfectly competitive local pizza market. If the price of pizza cheese increases (ceteris paribus), what is the expected impact on Ronny’s profit-maximizing output decision?
A) Output increases to cover the higher input cost
B) Output increases because the marginal cost curve shifts upward
C) Output decreases because the marginal cost curve shifts upward
D) Output decreases because the price of pizza must also increase
ANSWER
C
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