One Implication of the Shape of the Demand Curve That

question 54

Multiple Choice

One implication of the shape of the demand curve that faces 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 is unable to reach a new equilibrium if prices change.

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Definitions:

S Corporation

A special designation for a corporation that allows income, losses, deductions, and credits to pass through to shareholders for federal tax purposes.

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government.

Tax Benefit

A financial advantage that results from specific tax laws or regulations, allowing for reductions in tax liability.

Avoidance

A legal principle that allows a party to cancel or annul a contract under certain conditions.