Explain Why the Long-Run Product Price for a Perfectly Competitive

question 225

Essay

Explain why the long-run product price for a perfectly competitive firm will equal its minimum average total cost.

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Definitions:

Factory Overhead Ledger

An accounting ledger that details the indirect costs associated with manufacturing, which may include utilities, depreciation, and salaries of non-direct labor.

Unit Costs

The cost associated with a single unit of product or service, including all costs incurred to produce, deliver, and sell the product.

Job Order Cost Systems

An accounting method that assigns costs to specific batches or job orders, tracking the direct materials, direct labor, and manufacturing overhead per job.

Materials Costs

The total expense incurred to acquire raw materials that are directly used in the production of goods or services.