Which of the Following Is a True Statement About the Difference

question 118

Multiple Choice

Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run?

• A) Both will sell their products at a price equal to average total cost, but only the price taker will produce at minimum average total cost.
• B) Both will sell their products at a price equal to average total cost, but only the competitive price searcher will produce at minimum average total cost.
• C) Only the price taker will sell its product at a price equal to average total cost.
• D) Only the competitive price searcher will sell its product at a price equal to average total cost.

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Definitions:

Traceable Fixed Expenses

Fixed expenses that can be directly linked to a specific segment of a business and would disappear if the segment did not exist.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Variable Expenses

Costs or expenses that change in proportion to business activity levels or volume, such as sales commissions or raw material costs.

Traceable Fixed Expenses

Fixed costs directly associated with specific business segments, which would be eliminated if the segment was discontinued.