If the Firm Facing the Demand Curve P = 10

question 4

Multiple Choice

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

• A)10
• B)12
• C)13
• D)38

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Definitions:

Useful Life

The estimated time period a fixed asset is expected to be usefully productive for a business.

Deferred Revenues

Income received by a company for goods or services not yet delivered or rendered, recorded as a liability on the balance sheet until earned.

Adjusting Entry

At the close of an accounting cycle, adjusting entries are recorded in the journal to apportion revenues and expenses to the time frame in which they were truly incurred.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.