The Speedy Typesetting Company, a perfectly competitive firm, is currently producing where P = MC and is earning a normal profit. The yearly licensing fee that this firm must pay for the use of a statistical software program was just increased from $1,000 to $1,200. In the short run, this firm will most likely
A. reduce the amount of output it produces because its cost curves have shifted up and to the left.
B. produce more units of output to increase revenue to cover the additional fixed costs.
C. continue to produce the same amount of output because only its fixed costs have increased.
D. shut down because it will no longer be earning a normal profit.
Answer: C
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