Due to an Increase in the Price of a Competitor's

question 4

Multiple Choice

Due to an increase in the price of a competitor's product, the demand for a firm's product increases sharply. How is this most likely to affect the firm's marginal revenue and marginal cost?

• A) Marginal revenue will increase but marginal cost will decrease.
• B) Both marginal revenue and marginal cost will not be affected.
• C) Both marginal revenue and marginal cost will increase.
• D) Marginal revenue will not change but marginal cost will increase.
• E) Marginal revenue will increase but marginal cost will not change.

---

Definitions:

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.

Bill of Lading

A legal document issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods being carried.

Risk

The probability or threat of damage, injury, liability, loss, or any other negative occurrence, potentially caused by external or internal vulnerabilities, and that may be mitigated through preventive actions.

Sale of Goods Transaction

A commercial activity involving the transfer of ownership of tangible personal property from a seller to a buyer for a price.