Price in a Perfectly Competitive Industry

question 238

Multiple Choice

Price in a perfectly competitive industry:

• A)is determined by each firm,depending on its costs of production.
• B)is always equal to marginal revenue for the firm.
• C)must be greater than average total cost or the firm will shut down in the short run.
• D)is indeterminate in the short run.

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Definitions:

Trade Discount

A reduction in the listed price of goods or services offered by sellers to buyers in the business-to-business market, often determined by quantity purchased or early payment.

Inventory Account

An account in the general ledger that tracks the value of items a company holds for sale in the ordinary course of business.

Catalog List Price

The advertised price of goods or services in a catalog before any discounts, rebates, or special offers are applied.

Sales Tax

A tax imposed by a government on the sale of goods and services, typically calculated as a percentage of the selling price.