If the Demand Curve Facing the Acme Awl Company Is

question 67

Multiple Choice

If the demand curve facing the Acme Awl Company is tangent to its average total cost curve, all of the following statements are true except one.Which is the exception?

• A)Economic profit is zero.
• B)A normal profit exists.
• C)Marginal cost must exceed marginal revenue.
• D)Acme has excess capacity.
• E)Firms have no incentive to enter or leave this industry.

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Definitions:

Direct Materials

The raw materials directly used in the manufacturing of a product.

Budgeted Operating Income

The anticipated revenue from operations minus the expected operating expenses for a certain period, typically before financial expenses and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, often used in variance analysis.

Variable Costs

Charges that adjust in line with the scale of production or sales figures.