An Oligopolist Cannot Use the MR = MC Rule to Find

question 62

Multiple Choice

An oligopolist cannot use the MR = MC rule to find its equilibrium output level because

• A)oligopolists do not face stable demand curves for their output
• B)oligopolists do not try to maximize profits in the long run
• C)it is too difficult to estimate marginal cost
• D)the rule applies only in perfect competition
• E)the minimum efficient scale exceeds total quantity demanded

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Definitions:

Prior Writedown

A reduction in the book value of an asset when its market value falls below its current book value, previously accounted for in financial statements.

Consigned Goods

Items given to a third party to sell on behalf of the owner, but the owner retains ownership until the goods are sold.

Ownership

The legal right or state of having full possession and control over property, assets, or a company.

Method Of Cost Formula

The Method of Cost Formula refers to an accounting approach used to determine the value of inventory sold and remaining in stock, such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Average Cost Method.