The Following Figure Shows the Market Demand Curve for Penicillin

question 95

Multiple Choice

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure.

-Refer to the figure above.What is the change in consumer surplus when the market changes from perfect competition to a monopoly?

• A) Consumer surplus increases by 30 units.
• B) Consumer surplus decreases by 45 units.
• C) Consumer surplus increases by 90 units.
• D) Consumer surplus decreases by 135 units.

Understand the concept of accounts receivable and its impact on business operations.

Learn the importance of managerial and operating information in business decisions.

Grasp the principles of the monetary unit assumption and economic entity assumption in accounting.

Understand the role of stockholders' equity and its components in a corporation.

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Definitions:

Direct Method

A way of presenting a cash flow statement where actual cash flows from operating activities are disclosed, as opposed to estimating them indirectly through differences in non-cash items.

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The aggregate sum of cash inflows and outflows in a business, significantly impacting its ability to meet short-term obligations.

Investing Activities

Financial activities related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

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The act of purchasing shares in a company with the expectation of earning a return on investment through dividends or stock price appreciation.