When a Perfect Competitor Sells Additional Units

question 154

Multiple Choice

When a perfect competitor sells additional units,

• A) total revenue always increases.
• B) marginal revenue decreases.
• C) total revenue always decreases.
• D) total revenue remains unchanged.
• E) total revenue may increase or decrease.

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Definitions:

Capital in Excess of Par

The amount by which the proceeds from the issuance of shares exceed the par value of the shares issued; it's often referred to as additional paid-in capital.

Debt-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

Residual Dividend Policy

A strategy where dividends paid to shareholders are set based on the earnings left over after all operational costs and working capital needs are met.

Retained Earnings

Profits that a company has decided to keep or reinvest in the business instead of distributing to shareholders as dividends.