The Theory of Perfect Competition Is Built on Several Assumptions,including

question 65

Multiple Choice

The theory of perfect competition is built on several assumptions,including that

• A)each firm must earn economic profits to remain in the industry.
• B)there are few producers of an identical product.
• C)the individual firm can influence demand by advertising.
• D)the individual firm can affect the price of the product it sells.
• E)any firm can easily enter or leave the industry.

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Definitions:

Equivalent Costs

The concept in cost accounting that represents the cost of materials, labor, and overheads in partially finished goods, expressed in terms of fully finished goods.

Conversion Cost

Conversion Cost refers to the combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished products.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all items available for sale during the period.

Equivalent Units

A concept used in cost accounting to express the amount of work done on units of inventory in terms of fully completed units.