If the Market Demand for the Product Increases, in the Short

question 63

Multiple Choice

If the market demand for the product increases, in the short run a purely competitive firm

• A) will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
• B) will earn higher profits or experience smaller losses as a result of the change in the market.
• C) will experience no change in costs as it steps up production in response to the change in the market.
• D) can employ more inputs and increase the size of its plant, to respond to the change in the market.

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Definitions:

Owners' Equity

The residual interest in the assets of a business after deducting its liabilities, representing the ownership's value in the firm.

Net Worth

The total assets of an individual or company minus its total liabilities, representing the financial value of the entity.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.