Which of the Following Conditions Ensures That Excess Profits Cannot

question 61

Multiple Choice

Which of the following conditions ensures that excess profits cannot persist in a perfectly competitive market over the long run?

• A)Large number of firms in the industry.
• B)Outputs of the firms are perfect substitutes for one another.
• C)Complete information is available to all market participants.
• D)Ease of entry into the market.

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly traced to the end product, often considered part of manufacturing overhead.

Production

The process of creating goods and services, involving labor, raw materials, and machinery.

T-Account

A graphical representation of a general ledger account used in accounting to show debits on the left side and credits on the right side, assisting in understanding transactions.

Job-Order Costing

A cost accumulation method used in situations where each job, product, or batch is custom or sufficiently distinct from the others.