Which of the Following Is True of a Firm That

question 15

Multiple Choice

Which of the following is true of a firm that has reached the limit on its resources?

• A)It has idle capacity.
• B)Opportunity costs are now relevant.
• C)It has no relevant costs.
• D)It has excess capacity.

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Definitions:

Income-Consumption Curve

A graph that shows how a consumer's optimal bundle of goods changes as their income changes, all else being constant.

Marginal Utility

The change in satisfaction or utility gained from consuming an additional unit of a good or service.

Utility Maximizing

The process by which individuals select the mix of goods and services that maximizes their satisfaction or utility, given their budget constraint.

Elastic Demand

A situation where the demand for a product is sensitive to price changes, showing a significant change in quantity demanded when prices fluctuate.