If a Firm in a Perfectly Competitive Industry Raises Its

question 159

Multiple Choice

If a firm in a perfectly competitive industry raises its price above market price,

• A) total revenue for the firm will increase.
• B) profit will increase.
• C) sales will drop to zero.
• D) demand curves will become downward sloping.

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Definitions:

Ability-to-Pay Principle

A taxation principle that argues taxes should be levied according to an individual's or entity's capability to bear the tax burden.

Income Taxes

Taxes levied by governments on individuals or corporations' income, where the tax rate may increase as the taxable amount increases.

Excise Taxes

Taxes imposed on the sale of specific goods and services, such as tobacco, alcohol, and gasoline, usually aimed at discouraging their consumption or generating revenue.

Regressive Tax

A tax that takes a larger percentage from low-income earners than from high-income earners, considered regressive because it affects those who are less able to pay.