The Figure Given Below Shows the Demand Curve Faced by a Firm

question 13

Multiple Choice

The figure given below shows the demand curve faced by a firm. Figure 24.1 Refer to Figure 24.1 and calculate the revenue lost when the firm lowers the price of its product from $8 to $4.

• A)$20
• B)$18
• C)$24
• D)$16
• E)$28

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the cost of producing one additional unit of goods.

Shutdown Point

The level of output and price at which a firm's revenue just covers its variable costs, below which it would be better for the firm to cease operations.

ATC Curve

Represents the average total cost of producing a good or service, calculated by dividing total cost by the quantity produced, and typically displayed as a graph.

AVC Curve

The Average Variable Cost curve, which graphs the per unit variable costs of production against the quantity of output.