The Amount of Value a Firm Creates Is Measured By

question 37

Multiple Choice

The amount of value a firm creates is measured by:

• A)the difference between the previous year's profitability and the current year's profitability.
• B)dividing the market price of its products by the price that customers are actually willing to pay.
• C)the difference between its costs of production and the value that consumers perceive in its products.
• D)dividing the net profits of the firm by total invested capital.
• E)the sum of the profitability of the last two fiscal years.

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Definitions:

Demand Curve

A graph showing how the demand for a commodity or service varies with changes in its price.

Quantity Demanded

The total amount of a product that consumers are willing and able to purchase at a given price over a specified period.

Elastic Demand

A market situation where the demand for a product is significantly influenced by changes in its price.

Elastic Demand

A situation in which the demand for a product or service significantly changes in response to changes in price.