"Monopolists Do Not Worry About Efficient Production and Minimizing Costs

question 221

Multiple Choice

"Monopolists do not worry about efficient production and minimizing costs since they can just pass along any increase in costs to their consumers." This statement is

• A)false; price increases will mean fewer sales, which may lower profits.
• B)true; this is the primary reason why economists believe that monopolies result in economic inefficiency.
• C)false; the monopolist is a price taker.
• D)true; consumers in a monopoly market have no substitutes to turn to when the monopolist raises prices.

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Definitions:

Direct Materials Quantity Variance

The difference between the actual quantity of materials used and the standard quantity expected to be used, multiplied by the standard price per unit.

Overhead

The ongoing expenses of operating a business that are not directly associated with the production of goods or services.

Standard Labor Hours

A measurement in accounting for the amount of time workers are expected to spend on tasks, typically used to plan or assess productivity.

Direct Materials Price Variance

The difference between the actual cost of direct materials purchased and the expected (standard) cost multiplied by the actual quantity purchased.