If Average Variable Cost Exceeds Price for a Perfectly Competitive

question 30

True/False

If average variable cost exceeds price for a perfectly competitive firm in the short run,then it could increase profits by raising its price.

---

Definitions:

Spending Variance

is the difference between the budgeted amount of expenses and the actual amount spent.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for better performance evaluation.

Indirect Materials

Materials used in the production process but not directly traceable to a finished product, such as lubricants for machinery.

Spending Variance

The difference between the budgeted or planned amount of expense and the actual amount spent.