One Implication of the Shape of the Demand Curve Facing

question 107

Multiple Choice

One implication of the shape of the demand curve facing a perfectly competitive firm is that:

• A)if the firm increases its price above the market price, it will earn higher revenue.
• B)if the firm decreases its price below the market price, it will earn higher revenue.
• C)if the firm increases its price above the market price, it will earn zero revenue.
• D)the market would be unable to reach a new equilibrium if demand changed.

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Definitions:

Human-Capital Theory

An economic framework that suggests the accumulation of education, training, and health can improve workers' productivity and thus the economic output of a nation.

Human-Capital Theory

The concept suggesting that investing in education and training improves the productivity and efficiency of individuals, making them more valuable to employers and increasing their potential income.

Signaling View

A perspective in economics that suggests an action taken by a party can reveal or signal information about that party to other parties, often seen in contexts such as education and employment markets.

Superstar

A superstar is a highly prominent or exceptionally talented person, especially in entertainment or sports, who commands a significant degree of public fascination and influence.