Even Though Monopolistic Competition Results in Inefficiency,it Does Have Which

question 32

Multiple Choice

Even though monopolistic competition results in inefficiency,it does have which of the following benefits for society?

• A) Firms make zero economic profit in the long run.
• B) Firms can make an economic profit in the short run.
• C) Product variety benefits consumers.
• D) Marginal cost equals price in the long run.
• E) The premise of the question is incorrect because nothing in monopolistic competition justifies any economic inefficiency.

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Definitions:

Variable Costing

A pricing strategy that incorporates solely the variable costs associated with production—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of goods sold, while omitting fixed overhead expenses.

Absorption Costing

A method of accounting that incorporates all costs associated with manufacturing, including direct materials, direct labor, as well as both variable and fixed overhead expenses, into the product's cost.

Variable Costing

A costing method that includes only variable manufacturing costs—direct labor, direct materials, and variable manufacturing overhead—in unit product cost.

Net Incomes

The total earnings of a company after all expenses, taxes, and costs have been deducted from total revenue.