Refer to the Graph for a Monopolist in Short-Run Equilibrium

question 122

Multiple Choice

Refer to the graph for a monopolist in short-run equilibrium. This monopolist

• A)has a loss per unit equal to DE.
• B)has total fixed costs equal to area BEFC.
• C)earns positive economic profit equal to the area of ABED.
• D)will cease production since its economic profits are negative.

---

Definitions:

LIFO Inventory

A method of inventory valuation where the last items to be added to the inventory are the first ones to be used or sold, assuming that the cost of goods sold is based on the most recent prices.

Inventory Balance

The total value of a company's inventory at the end of an accounting period, including raw materials, work-in-progress, and finished goods.

Perpetual Inventory System

A Perpetual Inventory System continuously updates inventory records and cost of goods sold every time a transaction occurs, providing real-time inventory information.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold, standing for "First In, First Out."