Breaking a Monopoly Firm into Several Rival Firms Will Be

question 155

Multiple Choice

Breaking a monopoly firm into several rival firms will be unlikely to improve economic efficiency when economies of scale are important because

• A) several smaller firms will have higher per-unit costs than a single larger firm.
• B) a single firm will have higher per-unit costs than several smaller firms.
• C) it is harder to regulate many smaller firms than it is one large firm.
• D) consumers will find it harder to choose among the products of many alternative sellers.

Learn how to determine manufacturing overhead applied to jobs and the computation of unit product costs.

Understand the principle of calculating the cost of unused capacity and how it affects the costing system.

Develop an understanding of how job-order costing systems compute manufacturing overhead and apply it to jobs.

Gain insights into the preparation of income statements under a job-order costing system and the impact of cost of unused capacity.

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Definitions:

Production

The process that transforms scarce resources into useful goods and services.

Inputs

Resources used in the production process, including labor, capital, and materials.

Outputs

Goods and services of value to households.

Explicit Costs

Payments made directly to external parties as part of business operations, including salaries, rental fees, and the cost of goods.