The Following Figure Depicts the Short-Run Cost Curves of a Perfectly

question 114

Multiple Choice

The following figure depicts the short-run cost curves of a perfectly competitive firm.

-Refer to the figure above.A firm could choose to produce a quantity of 60 in the long run if ________.

• A) this firm could not exit the industry
• B) the firm was experiencing decreasing returns to scale
• C) barriers to entry existed
• D) the firm expected to price to rise in the future

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Definitions:

Direct Materials Price Variance

The difference between the actual cost and the standard cost of materials used in production, indicating how efficiently materials are being purchased.

Standard Price

Standard price is a predetermined cost assigned to materials and goods, used in budgeting and costing calculations.

Actual Price

The real price at which a transaction takes place, unaffected by any discounts or premiums.

Variable Budget

A budget that adjusts spending levels based on changes in actual revenue or other financial indicators.