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:

Externalities

Spillover effects of an activity that influence the well-being of nonconsenting parties.

Opportunity Cost of Capital

The potential return that is foregone by investing capital in one project rather than an alternative investment.

Stockholder Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the extent to which a firm has exceeded the break-even point.