Consider a Perfectly Competitive Firm Whose Minimum Average Total Cost

question 173

Multiple Choice

Consider a perfectly competitive firm whose minimum average total cost is $100.This firm is representative of all the firms in the market.If the market price is $80,then in the long run

• A)new,more-efficient firms will be attracted into the industry
• B)market supply will fall
• C)the firm's average revenue will fall
• D)all the firms currently operating will increase output
• E)total market output will rise

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Definitions:

Variable Costing

An accounting approach that solely accounts for variable production expenses like direct materials, direct labor, and variable manufacturing overhead in the calculation of product costs.

Limitations

The constraints or restrictions that hinder a process, investigation, or analysis.

Break-even

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the company has "broken even" on an investment or product.

Variable Selling Costs

Variable selling costs are expenses that vary directly with the level of production or sales volume, such as commissions and shipping charges.