Long-Run Equilibrium Under Monopolistic Competition Is Similar to Long-Run Equilibrium

question 95

Multiple Choice

Long-run equilibrium under monopolistic competition is similar to long-run equilibrium under perfect competition in that:

• A) price equals the minimum average total cost.
• B) firms face perfectly elastic demand curves.
• C) price equals average cost.
• D) marginal revenue equals average cost.

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Definitions:

Absorption Costing

This accounting style integrates all facets of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—into the comprehensive cost of a product.

Markup

The amount added to the cost of goods to cover overhead and profit, determining the selling price.

Variable Selling

Expenses that change in proportion to the volume of goods or services sold, such as commissions and shipping fees.

Special Order

A one-time order that is not usually part of the company's normal ongoing operations, often requiring special pricing or terms.