In Its Long- Run Equilibrium, a Firm in Monopolistic Competition

question 93

Multiple Choice

In its long- run equilibrium, a firm in monopolistic competition

• A) makes zero economic profit and produces above capacity output.
• B) makes a positive economic profit and produces above capacity output.
• C) makes zero economic profit and operates with excess capacity.
• D) makes a positive economic profit and operates with excess capacity.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be functional and economically useful.

Commercial Substance

Involves a situation where the future cash flows of a business are expected to change significantly as a result of a transaction.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been expensed since it was put into use.

Recorded Cost

The cost of an asset as it appears in a company's books or financial statements, reflecting the original cost of acquisition.