Refer to the Following Figure

question 101

Multiple Choice

Refer to the following figure:

The figure above shows the demand and cost curves facing a price-setting firm.
-In profit-maximizing (or loss-minimizing) equilibrium, the price-setting firm earns $______ in total revenue, which is ___________ the maximum possible total revenue of $________.

• A) $7,500; equal to; $7,500
• B) $8,000; more than; $7,500
• C) $7,650; less than; $8,000
• D) $8,000; equal to; $8,000
• E) $7,500; less than; $8,000

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Definitions:

Net Income

The total earnings or profit of a company after subtracting all expenses, including taxes and operating expenses, from its total revenue.

Gross Profit

Revenue minus the cost of goods sold, indicating the efficiency of a company in managing its labor and supplies in producing goods.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct production costs, such as rent, utilities, and administrative salaries.

Perpetual Inventory System

An inventory accounting system where adjustments to inventory levels are continuously recorded on a transaction by transaction basis.