Suppose the government required Crest to produce the efficient level of output. Which of the following describes what would happen to the firm and Crest’s customers?
- Crest would earn negative profit, forcing it to shut down, and Crest’s customers would gain no consumer surplus.
- Crest would earn zero profit, and its customers would be just as well off as before.
- Crest would earn positive profit and increase production, boosting consumer surplus