The Figure Given Below Represents a Firm in a Market

Multiple Choice

The figure given below represents a firm in a market characterized by many buyers and one seller.MC represents the initial marginal cost, MR the initial marginal revenue, and D the initial demand curve of the firm in equilibrium.Further, MC', D', and MR' represents the revised marginal cost, demand, and marginal revenue respectively after the firm adopts the strategy discussed below.


-Refer to Figure .Will the firm invest in the purchase of new machinery which improves the quality of its product?

A) It will not as the demand for the firm's output declines after using the new machine.
B) It will not as the firm's profit margin reduces after using the new machine.
C) It will if the annual cost for this machinery is more than $5.
D) It will if the annual cost for this machinery is less than $7.5.