Figure 16-4 -Refer to Figure 16-4. Assume the Firm in the Figure

question 172

Multiple Choice

Figure 16-4
-Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

• A)will increase its profits if it raises its price and reduces its production level.
• B)will increase its profits if it lowers its price and expands its production level.
• C)is maximizing profits.
• D)will increase its profits if it raises its prices and expands its production level.

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Definitions:

Stated Value

A per-share amount set by the board of directors for no-par value stock, which is not determined by market forces.

Revaluation Surplus

An increase in the value of an asset held by a company, recognized in equity, that occurs when the asset's current market value exceeds its previously recorded cost.

Share Capital

The total amount of money raised by a company through the sale of shares to investors.

Share Premium

The amount received by a company over and above the par value of its shares when it issues them to shareholders.