Suppose a Firm in a Competitive Market Produces and Sells

question 86

Multiple Choice

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00.What would be the firm's total revenue if it instead produced and sold 4 units of output?

• A) $4
• B) $8
• C) $32
• D) $64

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Definitions:

Market Prices

The prevailing price for goods or services in a competitive marketplace, determined by supply and demand.

Capital Structure

The composition of a firm's financing through a mix of debt, equity, and other financial instruments, affecting its risk and valuation.

Dividend Payout Ratios

The fraction of earnings paid to shareholders in dividends, usually expressed as a percentage.

Pretax Cost of Debt

The rate of interest a company pays on its borrowings before tax adjustments, often used in calculating the cost of capital for a company.