Figure 13-4 Figure 13-4 Shows Short-Run Cost and Demand Curves for a and Demand

question 34

Multiple Choice

Figure 13-4

Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-4.Should the firm represented in the diagram continue to stay in business despite its losses?

• A)No, it should shut down.
• B)Yes, its total revenue covers its variable cost.
• C)No, it is not able to cover its fixed cost.
• D)Yes, it should increase its revenue by raising its price.

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Definitions:

Accounts Receivable

Funds that customers owe to a business for products or services provided but have not yet been paid.

Cash Flow

Cash flow is the net amount of cash being transferred into and out of a business, indicating its ability to generate value, pay expenses, and invest in new opportunities.

Accumulated Depreciation

The total depreciation expense charged against an asset since it was acquired, reflecting its loss in value over time.

Original Cost

The initial expenditure involved in acquiring an asset or launching a project.