Two Firms, Firm a and Firm B, Have Identical Cost

question 159

Multiple Choice

Two firms, firm A and firm B, have identical cost curves.Firm A operates in perfect competition and firm B operates in monopolistic competition.In the long run, what can we say about the price and output that each firm charges?

• A)Firm A's price will be lower than firm B's price, and firm A's output will be lower than firm B's output.
• B)Firm A's price will be greater than firm B's price, and firm A's output will be greater than firm B's output.
• C)Firm A's price will be greater than firm B's price, and firm A's output will be lower than firm B's output.
• D)Firm A's price will be lower than firm B's price, and firm A's output will be greater than firm B's output.

---

Definitions:

Interest Receivable

An accounting term referring to the interest income that has been earned but not yet received in cash.

Interest Revenue

Income earned from lending funds or investing in interest-bearing financial assets.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders, used for reinvestment in the business, to pay debt, or to buy back shares.

Ending Inventory

Represents the value of goods available for sale at the close of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.