Which of the Following Is a True Statement About the Difference

question 118

Multiple Choice

Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run?

• A) Both will sell their products at a price equal to average total cost, but only the price taker will produce at minimum average total cost.
• B) Both will sell their products at a price equal to average total cost, but only the competitive price searcher will produce at minimum average total cost.
• C) Only the price taker will sell its product at a price equal to average total cost.
• D) Only the competitive price searcher will sell its product at a price equal to average total cost.

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Definitions:

Cost-volume-profit Analysis

An accounting technique used to determine how changes in costs and volume affect a company's operating income and net income.

Sales Mix

The relative distribution of sales among the various products available for sale.

Fixed and Variable Costs

Costs that remain constant regardless of the level of production or business activity (fixed) and costs that vary in direct proportion to changes in activity (variable).

Cost-volume-profit Analysis

A financial approach that identifies how variations in expenses and production volume impact a business's operating profit and total earnings.