If All Firms in an Industry Which Is Characterized by Decreasing

question 76

Multiple Choice

If all firms in an industry which is characterized by decreasing costs are charging a price equal to marginal cost, then an upward shift in demand in the long run will:

• A)increase industry output and lower price.
• B)decrease industry output and raise price.
• C)alter neither industry output nor price.
• D)result in much more competitive industry structure.
• E)do none of the above.

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Definitions:

Units Transferred Out

The total number of finished items moved from the production area to finished goods inventory during a specific period.

Ending Work In Process

Ending work in process refers to the cost of incomplete goods in production at the end of an accounting period, which will be carried forward into the next period.

Conversion Costs

Costs incurred in the process of converting raw materials into finished goods, typically including direct labor and manufacturing overhead.

Conversion Costs

The combined cost of direct labor and manufacturing overhead involved in transforming materials into finished goods.