In the Long Run, a Firm in a Monopolistically Competitive

question 78

Multiple Choice

In the long run, a firm in a monopolistically competitive industry has its price equal to its

• A) average total cost.
• B) marginal cost.
• C) marginal revenue.
• D) elasticity of demand.

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Definitions:

Overhead Rate

A measure used to allocate overhead costs to products or services based on a predetermined formula.

Direct Costs

Direct costs are expenses that can be directly attributed to a specific cost object, such as materials and labor directly involved in producing a product.

Indirect Costs

Expenses not directly tied to the production of a product or service, such as rent, utilities, and administrative salaries.

Cost Object

Any item for which a separate measurement of costs is desired, such as a product, service, project, or department.