A Monopolistically Competitive Firm Maximizes Profits or Minimizes Losses in the Short

question 56

Multiple Choice

A monopolistically competitive firm maximizes profits or minimizes losses in the short run by

• A)Setting price equal to marginal cost.
• B)Producing at the output level where ATC is minimized.
• C)Producing at the output level where MR equals MC.
• D)Producing at the output level where MC equals ATC.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the standard (or expected) cost, indicating how much more or less was spent on materials than was planned.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted cost of labor at the standard rate.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on standard cost accounting.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on the predetermined rate.