If There Is an Increase in Market Demand in a Competitive

question 204

Multiple Choice

If there is an increase in market demand in a competitive price-taker market, then in the short run

• A) there will be no change in the demand curves faced by individual firms in the market.
• B) the demand curves for firms will shift downward.
• C) the demand curves for firms will become more elastic.
• D) profits will rise.

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Definitions:

Separate Capital Account

An account used in partnerships and sole proprietorships that shows the owner's original investment plus any retained earnings or minus any losses and withdrawals.

Partnerships

A form of business organization in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a partnership agreement.

Treasury Stock

Treasury Stock represents shares that were issued and subsequently repurchased by the company, reducing the amount of outstanding stock on the open market.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits via dividends.