Which of the Following Statements Is (Are) TRUE

question 25

Multiple Choice

Which of the following statements is (are) TRUE?
I. Free entry to a perfectly competitive industry results in the industry's firms earning zero economic profit in the long run, except for the most efficient producers, who may earn economic rent.
II. In a perfectly competitive market, long-run equilibrium is characterized by LMC < P < LATC.
III. If a competitive industry is in long-run equilibrium, a decrease in demand causes firms to earn negative profit because the market price will fall below average total cost.

• A) I, II, and III
• B) II and III
• C) I and III
• D) I

Analyze the differences and applications of the direct and step-down methods of service department cost allocation.

Identify how the completeness of work-in-process inventory affects the calculation of equivalent units.

Recognize the impact of cost allocation methods on cost control in process costing.

Understand the historical developments and legal decisions that shaped cinema's business practices.

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Definitions:

Equilibrium Price

The financial value where the availability of goods equals consumer demand.

Demand Falls

Demand falls occur when there is a decrease in the quantity of a good or service demanded at any given price, often due to changes in consumer preferences, income, or price increases.

Supply Stays

A term that is not typically used in economic contexts; thus, it might not be a real key-term. NO.

Price Ceiling

A legally established maximum price a seller can charge for a product or service to prevent market prices from rising too high.