If a Perfectly Competitive Firm Raised the Price of Its

question 58

Multiple Choice

If a perfectly competitive firm raised the price of its product,

• A) its total revenue would rise but its total cost would rise by more.
• B) its profits would increase.
• C) the quantity of output it sells decreases to zero.
• D) the firm will be forced to advertise more.
• E) rival firms will follow suit and raise their prices also.

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Definitions:

Negligence-Based Product Liability

A legal principle holding manufacturers or sellers responsible for harming consumers due to careless design, manufacture, or warning practices.

Compensatory Damages

Monetary compensation awarded to a plaintiff to indemnify actual losses, expenses, or harm suffered due to the defendant's wrongful conduct.

Punitive Damages

Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate for losses and is intended to punish the wrongdoer.

Punitive Damages

Financial compensation awarded to a plaintiff in a lawsuit, exceeding simple compensation and intended to punish the defendant for egregious wrongdoing.