Consider the Efficiency of Various Market Structures

question 84

Multiple Choice

Consider the efficiency of various market structures.In the absence of other market failures,allocative efficiency is achieved only under perfect competition because only this market structure results in

• A)zero long-run profits.
• B)P = MC.
• C)complete freedom of entry and exit.
• D)maximization of profits through competition.
• E)productive efficiency.

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Definitions:

Spending Variance

The difference between the actual amount spent and the budgeted amount for a specific period, indicating under or overspending.

Variable Overhead

Costs that change with the level of production or service activity.

Activity Level

A metric indicating the volume or intensity of operations in a company, affecting its costs and resources.

Fixed Overhead

A set of costs that do not change with the level of production or sales, such as rent, salaries, and insurance.