The Figure Given Below Shows the Demand Curves [D₁ and D₂]

question 34

Multiple Choice

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital.Figure 17.1

-If the earnings report of a firm indicates higher earnings than was expected by the investors:

• A)the stock prices of the firm will decline.
• B)the price of the product produced by this firm will decline.
• C)the price of the product produced by this firm will rise.
• D)the firm will spend more on advertising.
• E)the stock prices of this firm will increase.

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Definitions:

Sales Quantity

The total number of units of a product or service sold within a specific period.

Demand Schedule

A table that shows the quantity of a good or service that people will purchase at various prices over a specified period.

Total Revenues

The total income received by a firm from its sales of goods or services, calculated by multiplying the selling price by the quantity sold.

Income Elasticity

A measure of how the demand for a good or service changes with a change in the consumer's income.