If the Donut Industry Is Perfectly Competitive and Is in Long-Run

question 186

Multiple Choice

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

• A) is greater than marginal cost.
• B) is greater than short-run average cost.
• C) is greater than long-run average cost.
• D) equals long-run average cost.

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Definitions:

Equivalent Unit

A measure used in cost accounting to represent the amount of work done on partial units of output, making it possible to calculate costs in process costing systems.

Process Costing

A costing method used for homogenous products, where costs are accumulated for a continuous process and then assigned to units of output.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing expenses to convert raw materials into finished products.

Curing Department

A specialized area in a manufacturing or production facility where processes such as drying, hardening, or chemical treatment are applied to products.