Assume a Good Has a Downward-Sloping,linear Demand Curve

question 93

Multiple Choice

Assume a good has a downward-sloping,linear demand curve.Starting at a price of zero,as the price of the good increases,total revenue

• A)Increases indefinitely.
• B)Decreases indefinitely because the quantity sold will decrease.
• C)Is constant.
• D)Increases,then decreases.

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Definitions:

Marginal Cost

The growth in overall costs resulting from the manufacture of one more unit of a good or service.

Economic Losses

Situations where total costs exceed total revenues, indicating that resources may be better utilized elsewhere.

Average Variable Cost

The total variable costs (costs that change with the level of output) of production divided by the quantity of output produced.

Short Run

A time period in which at least one input is fixed and cannot be changed by the firm, affecting its production decisions.