The Amount of Value a Firm Creates Is Measured by the

question 18

Multiple Choice

The amount of value a firm creates is measured by the

• A) economies of scale they are able to achieve.
• B) difference between its costs of production and the value that consumers perceive in its products.
• C) profitability the firm achieves.
• D) difference between its costs of production and the price that it charges for its products.

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Definitions:

Prices

The amount of money required to purchase a good, service, or asset, often influenced by supply and demand.

Short-run

A period in which at least one factor of production is fixed, limiting the ability of a business to fully adjust to market changes.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period at current prices.

Short-run Phillips Curve

It illustrates the inverse relationship between the rate of inflation and the unemployment rate in the short term.