Which of the Following Statements About a Perfectly Competitive Firm

question 86

Multiple Choice

Which of the following statements about a perfectly competitive firm is necessarily false?

• A)There are few substitutes for the firm's product.
• B)There are few complements to the firm's product.
• C)The firm produces the quantity at which marginal revenue equals marginal cost.
• D)The firm sells a product that is identical in the eyes of buyers to any other product sold in the industry.

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Definitions:

Materials Cost

The cost of materials that are used in the production of goods; a component of the total cost of goods sold.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold based on the average cost of all goods available for sale during the period.

Conversion Costs

Combined costs of direct labor and manufacturing overhead, representing the costs to convert raw materials into finished goods.

Weighted-Average Method

An inventory costing method that takes the average cost of all goods available for sale during the period, weighted by the quantities purchased at different times.