A Firm Facing a Horizontal Demand Curve

question 194

Multiple Choice

A firm facing a horizontal demand curve

• A)cannot affect the price it receives for its output.
• B)always produces at an output at which P = MR.
• C)faces perfectly elastic demand for its product.
• D)All of the responses are correct.

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Definitions:

Operating Profit

The amount left over from revenue once all costs and expenses are subtracted.

General Expenses

The overhead costs not directly tied to the production of goods or services, including rent, utilities, and office supplies.

Inventory

The total quantity of goods and materials a business holds for the purpose of resale or production, tracked for management and operational efficiency.

Cash Conversion Cycle

A measurement gauging how long a company needs to turn its investments in inventory and other assets into cash flows through sales.