How Much Revenue a Firm Brings in by Improving the Quality

question 16

Multiple Choice

How much revenue a firm brings in by improving the quality of a product such that more consumers want to buy it depends on which two factors?

• A)The decrease in demand caused by the increase in quality and the incremental profit earned on each additional unit sold
• B)The increase in demand caused by the increase in quality and the incremental profit earned on each additional unit sold
• C)The increase in demand caused by the increase in quality and the incremental loss on each additional unit sold
• D)The decrease in demand caused by the increase in quality and the incremental loss on each additional unit sold
• E)The quality of changes to the original product and the decrease in demand cause by the changes in quality

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Definitions:

Parent Company

A corporation that has control over one or more subsidiary companies, usually by owning a significant portion of their stock.

Fair Value

The predicted cost at which a property can be purchased or sold in a present deal between agreeable participants.

Equity Method

An accounting technique used to record investments in other companies, reflecting the owning company's proportionate share of the investee's profits.

Unrealized Gain Or Loss

Changes in the fair value of equity or debt securities for a period.