If a Monopoly Engages in Rent Seeking

question 49

Multiple Choice

If a monopoly engages in rent seeking,
i.its average total cost curve is lower than otherwise.
ii.it might or might not make an economic profit depending on how many other competitors also are rent seeking.
iii.it necessarily incurs an economic loss.

• A) i only
• B) ii only
• C) iii only
• D) i and ii
• E) i and iii

Apply internal control principles to cash transactions.

Prepare adjusting journal entries as a result of the bank reconciliation process.

Understand the purpose and operation of a petty cash fund, including establishment, replenishment, and adjustment.

Recognize the different types of documents and their roles in internal control and cash management.

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Definitions:

Inventory Method

The approach a business uses to value its inventory and determine the cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Gross Profit Ratio

A financial metric used to assess a company’s financial health by dividing gross profit by net sales.

Lost Inventory

Inventory that is unaccounted for due to theft, damage, or error, leading to discrepancies in stock records.

Gross Profit Method

The Gross Profit Method estimates the cost of goods sold and the ending inventory value by applying the company's average gross profit percentage to its net sales.