Assume There Is an Increase in the Number of Consumers

question 39

Multiple Choice

Assume there is an increase in the number of consumers in the market for a good sold by perfectly competitive firms that are initially producing the profit-maximizing level of output.For the individual firm,this would result in:

• A)a decrease in both price and the profit-maximizing quantity of output.
• B)a decrease in price and increase in the profit-maximizing quantity of output.
• C)an increase in both price and the profit-maximizing quantity of output.
• D)an increase in price and decrease in profit-maximizing quantity of output.

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Definitions:

Net Operating Income

A measure of a company's profitability, calculated as the gross revenue minus operating expenses, excluding taxes and interest.

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, indicating the portion contributing to covering fixed costs and generating profit.

Fixed Monthly Expenses

Recurring costs that do not vary in amount and are paid on a monthly basis, such as rent or loan payments.

Net Operating Income

Earnings from a company's core business operations, excluding deductions for interest and taxes.