When a Profit-Maximising Firm in a Monopolistically Competitive Market Charges

question 150

Multiple Choice

When a profit-maximising firm in a monopolistically competitive market charges a price higher than marginal cost, the:

• A)burden of the deadweight loss falls entirely on consumers
• B)burden of the deadweight loss falls entirely on producers
• C)deadweight loss is dissipated by the excess capacity
• D)market experiences a deadweight loss

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Definitions:

Activity Rate

A rate that determines the cost driver of a particular activity, used in activity-based costing to allocate costs to products or services.

Supervising

The act of overseeing and managing employees or processes to ensure that tasks are completed efficiently and effectively.

First Stage Allocations

The initial process in cost accounting of assigning overhead costs to different departments or cost pools.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate product cost information.