In the Short Run,a Perfectly Competitive Firm

question 79

Multiple Choice

In the short run,a perfectly competitive firm

• A) can make only zero economic profit.
• B) can possibly make an economic profit or possibly incur an economic loss.
• C) produces the level of output that sets the average total cost equal to the market price.
• D) can vary all its inputs.
• E) can change only its fixed inputs.

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Definitions:

Machine-Hours

A measurement of the amount of time machines are operating, used as a basis for allocating machine-related costs to products or services.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers, rent of the factory, and depreciation of manufacturing equipment.

Budget Variance

The difference between budgeted figures for revenue or spending and the actual amounts incurred.

Machine-Hours

A measure of production time, calculated by the number of hours machines are operating as part of the manufacturing process.