Which Statements Is TRUE for a Perfectly Competitive Firm That

question 30

Multiple Choice

Which statements is TRUE for a perfectly competitive firm that is in long-run equilibrium?

• A) It is producing at the minimum point of its marginal cost curve.
• B) It is producing at the minimum point of its LRATC curve but not its SRATC curve.
• C) It is producing at the point where MR exceeds LRATC.
• D) It is producing at the minimum point of both its LRATC and SRATC curves.

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Definitions:

Finished Goods Inventory

Items in stock that are completed and ready for sale, representing one of the stages in the production inventory.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead from product cost calculations.

Net Operating Income

The income generated from normal business operations after deducting operating expenses such as wages and cost of goods sold, excluding income from investments and other non-operational sources.

Variable Costing

An accounting method that only considers variable costs (costs that change with production levels) in product costing and decision-making.