FIGURE 4-3 -Refer to Figure 4-3,which Shows a Demand Shift and the and the Short-Run

question 62

Multiple Choice

FIGURE 4-3
-Refer to Figure 4-3,which shows a demand shift and the short-run and long-run supply curves for some product.In the new long-run equilibrium at E_L,producers' revenue

• A)is unambiguously lower than at E_S.
• B)could be higher or lower than at E_S,depending on the price elasticity of demand.
• C)is unambiguously lower than at E₀.
• D)could be higher or lower than at E₀,depending on the price elasticity of demand.
• E)is unambiguously higher than at E_S.

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Definitions:

Residual Value

The estimated value that an asset will realize upon its disposal at the end of its useful life.

Depreciation Adjustment

A financial accounting process that allocates the cost of a tangible asset over its useful life to account for the decline in its value.

Assets

Resources owned by a company deemed to have economic value and are expected to provide future benefits to the operations of the company.