Which of the Following Statements Best Describes the Price, Output

question 47

Multiple Choice

Which of the following statements best describes the price, output, and profit conditions of monopolistic competition?

• A) Price will equal marginal cost at the profit-maximizing level of output; profits will be positive in the long-run.
• B) Price will always equal average variable cost in the short run and either profits or losses may result in the long run.
• C) Marginal revenue will equal marginal cost at the short run, profit-maximizing level of output; in the long run, economic profit will be zero.
• D) Marginal revenue will equal average total cost in the short run; long-run economic profits will be zero.

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Definitions:

Depreciation Expense

The allocated amount of an asset's cost charged to expense over time, reflecting the loss in value as the asset is used in operations.

Straight-Line Depreciation Rate

A method of calculating depreciation of an asset, distributing its cost evenly across its useful life.

Useful Life

The estimated period over which a fixed asset is expected to be usable by the company, affecting its depreciation calculation.

Depreciation Percentage

The rate at which a company depreciates an asset, expressed as a percentage of its total value.