The Assumption That Precludes Economic Profits in Monopolistic Competition in the Long

question 127

Multiple Choice

The assumption that precludes economic profits in monopolistic competition in the long run is that

• A)there are many buyers and sellers.
• B)the firms produce a homogeneous product.
• C)there is easy entry and exit in this market structure.
• D)buyers and sellers have all relevant information.

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Definitions:

Markup Percentage

The percentage added to the cost of goods to cover overhead and profit, representing the difference between the cost of the product and its selling price.

Product Cost

The total of costs directly attributed to the production of a product, including materials, labor, and manufacturing overhead.

Contribution Margin

A metric that represents the amount of revenue from sales that exceeds the total variable costs associated with producing those sales.

Machine Hours

A measure of the amount of time a machine is operated during a given period, used for allocating manufacturing costs to products or activities.