Use the Figure Below to Answer the Following Questions

question 76

Multiple Choice

Use the figure below to answer the following questions.
Figure 14.2.3
-Refer to Figure 14.2.3.Assume this firm faces demand curve D₂.If this firm in monopolistic competition is maximizing economic profit,

• A)there will be entry of rival firms into the industry.
• B)rival firms will exit the industry.
• C)it is producing the efficient quantity.
• D)the number of firms in the industry will remain constant.
• E)economic profit will fall over time.

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Definitions:

Fixed Manufacturing Overhead

Expenses related to manufacturing that remain constant regardless of the level of production, such as building lease payments and equipment depreciation.

Deferred Inventories

Inventory costs that are not expensed in the period they are incurred but are deferred to a future period.

Absorption Costing

This accounting practice involves adding all costs associated with production, including direct materials, labor, and both kinds of overhead expenses (variable and fixed), into the cost calculation of a product.

Unit Product Cost

The total cost (fixed and variable) associated with making one unit of product.