If a Firm Faces a Horizontal Demand Curve

question 10

Multiple Choice

If a firm faces a horizontal demand curve

• A) when it increases its price, its revenues will rise.
• B) increases in revenues are possible if it increases its price.
• C) increases in revenues are possible without reductions in its price.
• D) it is the only seller of the product in a given market.
• E) industry and product demand curves are identical.

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Definitions:

Legal Capital

Minimum amount of capital that a corporation must leave in the company (cannot be withdrawn by stockholders) for the protection of the creditors.

Stated Value

A value assigned to no-par stock by the company's board of directors.

No-Par Value

Refers to shares of stock that have not been assigned a specific par value by the issuing company.

No-Par Value

Refers to shares of stock issued without a specified face value, unlike par value stock which has a legal capital amount assigned per share.