A Monopolistically Competitive Firm Is Similar to

question 239

Multiple Choice

A monopolistically competitive firm is similar to

• A) a monopoly in the short run because it can make an economic profit in the short run and is similar to a perfectly competitive firm in the long run because it cannot make a positive economic profit.
• B) a perfectly competitive firm in the short run because it cannot make an economic profit in the short run and is similar to a monopoly in the long run because it can make an economic profit.
• C) a monopoly because it can make an economic profit in both the short run and long run.
• D) a perfectly competitive firm because its economic profit is equal to zero in both the short run and long run.

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Definitions:

Activity-Based Costing

A method of accounting that assigns costs to products based on the activities they require.

Overhead Applied

The allocation of overhead costs to specific products or cost centers based on a predetermined rate or method.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, aiming to provide more accurate insights into what drives costs and profitability.

Unit Product Cost

The total cost, both fixed and variable, associated with creating a single unit of a product.