When a Monopolistically Competitive Industry Is in Long- Run Equilibrium

question 4

Multiple Choice

When a monopolistically competitive industry is in long- run equilibrium, each firm will be operating where price is

• A) equal to average total cost and to marginal cost.
• B) greater than marginal cost but equal to average total cost.
• C) greater than average total cost and greater than marginal cost.
• D) greater than average total cost but equal to marginal cost.
• E) less than marginal cost and equal to average total cost.

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Definitions:

Investing Activities

Financial transactions that relate to the acquisition or sale of assets, investments, and other long-term items that are not part of the company's primary operations.

Amortization

The process of gradually reducing the cost of an intangible asset through scheduled charges to expense over its useful life.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.