Which of the Following Is a Key Characteristic of the Long-Run

question 52

Multiple Choice

Which of the following is a key characteristic of the long-run competitive equilibrium that distinguishes it from the short-run competitive equilibrium?

• A) Free entry to reduce short-run profits, or free exit to reduce short-run losses.
• B) Economic profits are positive, but cannot be negative.
• C) Marginal revenue is greater than marginal cost.
• D) Average revenue is less than average cost.

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Definitions:

Overapplied Overhead

A situation where the overhead allocated to products exceeds the actual overhead costs incurred, indicating that too much overhead cost was allocated to production.

Underapplied Overhead

The situation where the allocated overhead costs are less than the actual overhead costs incurred.

Job-Order Costing

A costing method used to determine costs for each individual job or project, tracking direct labor, direct materials, and overhead.

Overapplied Overhead

A circumstance where manufacturing overhead costs assigned exceed the real costs incurred for overhead.