When a Firm Faces a Downward-Sloping Demand Curve, Marginal Revenue

question 51

Multiple Choice

When a firm faces a downward-sloping demand curve, marginal revenue

• A)must exceed price because the price effect outweighs the output effect.
• B)is less than price because a firm must lower its price to sell more.
• C)equals price because the firm sells a standardised product.
• D)must exceed price because the output effect outweighs the price effect.

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Definitions:

Firm Commitment Offer

An underwriting or lending agreement where the underwriter or lender guarantees to purchase all the securities at a set price, assuming full financial risk.

Venture Capital

Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Financing

The act of providing funds for business activities, making purchases or investing, often involving loans, equity, or other forms of financial instruments.

High-risk Ventures

Business projects or investments that carry a significant chance of failing but may offer high rewards if successful.