When It Takes One Firm in an Industry to Produce

question 188

Multiple Choice

When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industry

• A) experiences economies of scale.
• B) has barriers to entry due to ownership of resources.
• C) has no barrier to entry.
• D) has a license granted by the government.

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Definitions:

Markup Percentage

The ratio between the cost of a good or service and its selling price, expressed as a percentage over the cost.

Total Cost Method

A method of inventory valuation where the total cost of goods available for sale is allocated to the cost of goods sold and ending inventory.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or appreciation, including stocks, bonds, real estate, and more.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is contributing to covering fixed costs and generating profit.