In Long-Run Competitive Equilibrium, Firms

question 2

Multiple Choice

In long-run competitive equilibrium, firms

• A)earn positive economic profits.
• B)have no incentive to make any changes.
• C)earn losses on some units of the good they produce and sell.
• D)do not produce the quantity of output at which MR = MC.

Evaluate the effectiveness of ABC in identifying cost drivers and allocating costs accordingly.

Apply knowledge of ABC in determining the total overhead cost allocated to products.

Understand the significance of first and second stage allocations in ABC.

Understand the fundamentals of activity-based costing (ABC) and its application in allocating manufacturing overhead costs.

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Definitions:

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, typically because another party bears the cost of those actions.

Car-Insurance Coverage

Protection against financial loss resulting from incidents involving a vehicle, including accidents, theft, and other damages.

Moral Hazard

A situation where one party is more likely to take risks because they do not bear the full consequences of their actions.

Auto Insurance

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident or other vehicular damage.