The Main Difference Between Perfect Competition and Monopolistic Competition Is

question 13

Multiple Choice

The main difference between perfect competition and monopolistic competition is

• A)there are more firms in perfect competition.
• B)perfect competition has freedom of entry and exit.
• C)monopolistic competition has product differentiation.
• D)firms earn profits in the long run in monopolistic competition.
• E)monopolistic competition has lower costs.

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Definitions:

Net Operating Income

The financial gain a company receives from its essential business operations, prior to the removal of interest and tax costs.

Variable Costing

Variable costing is an accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a product.

Net Operating Income

The total profit of a company after all operating expenses are subtracted from total revenues but before deducting taxes and interest.

Absorption Costing

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