By Definition, a Firm Is

question 438

Multiple Choice

By definition, a firm is

• A) a business organization that makes profits.
• B) a business organization that utilizes resources to produce goods or services with the goal of making a profit.
• C) a business organization that consists of more than one person.
• D) an organization, whether private or public, that may or may not make a profit.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.

Maximum Willingness

The highest amount an individual or entity is ready to pay for a good or service.

Individual Pays

A principle where the cost of a service or good is borne by the individual who consumes or uses it, rather than by society or an organization.

Aggregate Demand Curve

Describes the buying behavior of a group of consumers. We add up all the individual demand curves to get an aggregate demand curve (the relationship between the price and the number of purchases made by a group of consumers).