An Implication of the Downward Slope of the Demand Curve

question 34

Multiple Choice

An implication of the downward slope of the demand curve for a monopolistic competitive firm is that

• A) its marginal revenue curve slopes upward.
• B) its marginal revenue curve and its demand curve are identical (same) line.
• C) its marginal revenue curve slopes downward but lies above the demand curve.
• D) its marginal revenue curve slopes downward but lies below the demand curve.

---

Definitions:

Accrual-Basis Operating Income

The measure of a company’s operating profit that includes all earned revenue and incurred expenses, recognized as they are earned or incurred, not when cash is exchanged.

Working Capital Accounts

Accounts representing the operating liquidity available to a business, encompassing accounts receivable, accounts payable, inventory, etc.

Operating Activities

Business activities and transactions related to the primary operations of a company, including revenue generation and expenses.

Issuing Common Stock

The process by which a corporation sells new shares of its common stock to investors to raise equity capital.