In Perfect Competition,the Assumption of Easy Entry and Exit Implies

question 64

Multiple Choice

In perfect competition,the assumption of easy entry and exit implies that,in the _____ run,all firms in the industry will earn _____ economic profits.

• A)long;zero
• B)short;positive
• C)short;zero
• D)long;positive

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Definitions:

Total Manufacturing Costs

The sum of all costs directly involved in the production of goods, including raw materials, direct labor, and manufacturing overhead.

Absorption Cost Approach

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a unit of product.

Manufacturing Costs

Expenses directly related to the production of goods, such as raw materials, labor, and factory overhead.

Direct Labor

The labor costs of workers who are directly involved in the production of goods or the provision of services.