What Is the Usual Response of Firm to an Increase

question 81

Multiple Choice

What is the usual response of firm to an increase in the price of what they sell?

• A)An increase in output
• B)An increase in hiring factors of production
• C)An increase in the profit level of the firm
• D)An increase in employment at the firm
• E)All of these responses are correct.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good consumers are willing to buy at various prices.

Monopolistic Competitors

Firms in a market structure where there are many producers selling products that are similar but not identical, allowing for a degree of market power and some control over prices.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay, capturing all available consumer surplus.

Large Firms

Companies that are significantly larger than the average for their industry, often having considerable influence over market conditions and prices.