What Will an Increase in the Demand for a Product

question 14

Multiple Choice

What will an increase in the demand for a product cause output to do?

• A) Decline, while the demand for the resources used to produce the product will remain constant.
• B) Increase, and the demand for the resources used to produce the product will rise.
• C) Increase, and the price of resources used to produce the product will increase if their supply is perfectly elastic.
• D) Increase, and the demand for the resources used to produce the product will fall.

Understand the relationship between demand curves and revenue in the context of market structures.

Identify and interpret the differences between marginal revenue, total revenue, average revenue, and marginal cost.

Analyze the impact of price changes on revenue in different segments of the demand curve.

Understand the characteristics and implications of operating on different segments of the elasticity of demand.

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Definitions:

Retains Earnings

Profits that a company keeps after dividends have been paid out to shareholders, often re-invested into the business for growth, paying off debt, or other purposes.

Investment Purposes

The intention behind allocating resources, often funds, into financial assets, real estate, or business ventures aiming to generate future returns.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, considered a key factor in determining the resources employed by a firm.

Rental Cost

The price paid for the temporary use of a good, service, or property owned by another entity.