In the Long Run a Perfectly Competitive Firm Operates ____

question 104

Multiple Choice

In the long run a perfectly competitive firm operates ____ and a monopolistically competitive firm operates ____.

• A) at the efficient scale; with excess capacity
• B) at the efficient scale; at the efficient scale
• C) with excess capacity; with excess capacity
• D) with excess capacity; at the efficient scale

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses from revenue.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a product.

Absorption Costing

A system for determining product costs that encompasses all manufacturing expenses, including direct materials, direct labor, and overheads, regardless of them being fixed or variable.

Ending Inventory

The value of goods available for sale at the end of an accounting period.