A Firm in a Competitive Market Currently Produces and Sells

question 298

Multiple Choice

A firm in a competitive market currently produces and sells 500 doorknobs for a price of $10 per doorknob. Which of the following events would decrease the firm's average revenue?

• A)The firm increases its output above 500 doorknobs.
• B)The firm decreases its output below 500 doorknobs.
• C)The market price of doorknobs rises above $10.
• D)The market price of doorknobs falls below $10.

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Definitions:

Critical Thinking

The ability to think clearly and rationally, understanding the logical connection between ideas and critically evaluating arguments.

Scientific Inquiry

A systematic process used to investigate phenomena, acquire new knowledge, or correct and integrate previous knowledge, based on empirical evidence and the scientific method.

Inductive Reasoning

A method of reasoning in which general principles are inferred from specific observations or instances.

Empirical Reasoning

A mode of reasoning based on observed and measured phenomena and derives knowledge from actual experience.