A Monopoly May Exist Because

question 178

Multiple Choice

A monopoly may exist because

• A)government has refused to grant a public franchise.
• B)one firm has the exclusive ownership of a necessary resource.
• C)the firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers.
• D)a and b
• E)a, b, and c

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, indicating how effectively a company controls its materials costs.

Raw Material Purchase

The process of acquiring the basic materials needed for production of goods.

Fixed Manufacturing Overhead

Fixed manufacturing overhead costs are those production expenses that do not vary with the volume of production, such as salaries of managerial staff and rent of the factory.

Budgeted Fixed Manufacturing Overhead

The predetermined amount of fixed overhead expenses expected to be incurred in the manufacturing process.