Which of the Following Explains Why Firms in Competitive Price-Searcher

question 70

Multiple Choice

Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?

• A) There is always more than one firm in competitive price-searcher and competitive price-taker markets.
• B) Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not.
• C) In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly.
• D) A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not.

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Definitions:

Actual Total Labour Cost

The real amount spent on wages and benefits for employees involved in the production process during a specific period.

Standard Labour Rate

The pre-established rate per hour that a company expects to pay for direct labor.

Actual Units

The real quantity of items produced, sold, or consumed, as opposed to planned or theoretical quantities.

Variable Overhead Spending Variance

This is the difference between the actual variable overheads incurred and what was expected or budgeted, based on the actual level of production activity.