Which of the Following Statements Concerning the Monopolist with the Cost

question 25

Multiple Choice

Which of the following statements concerning the monopolist with the cost and demand curves shown in the figure below is true?

• A)At output B, the firm is minimizing losses in the short run; in the long run it should shut down.
• B)At output C, P = MC, and the firm is maximizing profits.
• C)At output A, the firm is maximizing profits; however, in the long run the firm should go out of business.
• D)At output B, the firm should shut down in the short run.
• E)None of the above are true.

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Definitions:

Work Centers

Specific locations within a manufacturing operation where specific tasks or groups of tasks are carried out.

Conversion Cost

The total cost of direct labor and manufacturing overhead to convert raw materials into finished goods.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and constitute a significant portion of the production costs.

Equivalent Units

A concept used in cost accounting to express the amount of work done on partially completed goods in terms of fully completed units.