The Degree to Which a fiRm's Output Is Responsive to a Change

question 93

Multiple Choice

The degree to which a firm's output is responsive to a change in price is measured by the _____.

• A) elasticity of supply
• B) marginal cost curve
• C) profit earned by a firm
• D) income elasticity of demand

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Definitions:

Average Net Income

The mean amount of net earnings calculated over a specified period, indicating the profitability of a business after all expenses have been subtracted from revenues.

Accounting Return

A measure of profitability in relation to various accounting measures, such as net income or assets.

Average Accounting Return (AAR)

An investment’s average net income divided by its average book value.

Return on Equity (ROE)

A measure of financial performance calculated by dividing net income by shareholders' equity, reflecting the profitability relative to the equity.