Because of One Assumption in the Theory of Monopolistic Competition

question 172

Multiple Choice

Because of one assumption in the theory of monopolistic competition, the excess capacity theorem exists. What is the assumption?

• A)There are many sellers and buyers.
• B)Each firm produces and sells a slightly differentiated product.
• C)There is easy entry into the industry.
• D)There is easy exit from the industry.

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Definitions:

Paid For Equipment

Refers to the cash outflow for the purchase of equipment, considered a capital expenditure in accounting.

Purchased On Account

Transactions where goods or services are bought on credit, with payment to be made at a later date.

Accounts Receivable

Amounts due to a firm from its clients for goods or services delivered but not yet compensated for.

Subsidiary Ledgers

Detailed records that contain information about specific accounts, supporting the totals recorded in the general ledger.