In the Long Run, a Perfectly Competitive Market Will

question 266

Multiple Choice

In the long run, a perfectly competitive market will

• A)produce only the quantity of output that yields a long-run profit for the typical firm.
• B)supply whatever amount consumers will buy at a price which earns the market an economic profit.
• C)supply whatever amount consumers demand at a price determined by the minimum point on the typical firm's average total cost curve.
• D)generate a long-run equilibrium where the typical firm operates at a loss.

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Definitions:

Net Operating Income

The profit a company generates from its regular, core business operations, excluding income from investments and after subtracting operating expenses.

Fixed Manufacturing Overhead

The sum of all the production costs that are not directly linked to the volume of production, such as salaries of managers and depreciation of equipment.

Absorption Costing

A method of costing that includes all manufacturing costs—both fixed and variable—in the cost of a product.

Break-Even

The financial point at which revenues exactly cover all costs, both fixed and variable, representing no profit or loss situation with different wording.