Assume That All Firms in This Industry Have Identical Cost

question 19

Multiple Choice

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. In the long run, there will be ______ firms in this market.

• A)10
• B)15
• C)25
• D)50

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Definitions:

Quality Costs

Expenses associated with preventing, detecting, and correcting defective work, including costs of quality control measures and rework.

Direct Material Costs

The costs of raw materials or components that are directly traceable to a finished product.

Prevention Costs

Expenses incurred to prevent or minimize the number of defects in the manufacturing process.

Overapplied

A situation where the allocated overhead costs exceed the actual overhead costs incurred.