Consider the Efficiency of Various Market Structures

question 84

Multiple Choice

Consider the efficiency of various market structures.In the absence of other market failures,allocative efficiency is achieved only under perfect competition because only this market structure results in

• A)zero long-run profits.
• B)P = MC.
• C)complete freedom of entry and exit.
• D)maximization of profits through competition.
• E)productive efficiency.

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Definitions:

Accounting Assumptions

Accounting Assumptions are foundational principles followed in the preparation of financial statements, such as the consistency, going concern, and accrual basis.

Conventions

Established practices or standards in accounting that guide the preparation and presentation of financial statements.

Materiality Principle

An accounting principle that states financial reports should include all items significant enough to influence the decision-making process of an individual reading the report.

Charging to Expense

The process of recognizing a cost as an expense in the income statement during the period in which it is incurred.