Which of the Following Is NOT an Assumption of the Model

question 57

Multiple Choice

Which of the following is NOT an assumption of the model of monopolistic competition model?

• A) there is freedom of exit and entry into the industry
• B) many small firms
• C) each firm produces a product which is identical to that of its competitors
• D) each firm is independent in its decision making

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Definitions:

Inventory

The goods and materials that a business holds for the ultimate goal of resale or processing.

Absorption Costing

An approach to calculating costs that encompasses all expenses related to production, including direct materials, direct labor, and all manufacturing overheads, whether they are variable or fixed, within a product's cost.

Variable Costing

A cost accounting method that only allocates variable production costs to products, while fixed costs are treated as period expenses.

Net Income

The net earnings of a business once all costs, taxes, and expenses have been deducted from its total income.