Assume That All Firms in This Industry Have Identical Cost

question 30

Multiple Choice

Assume that all firms in this industry have identical cost functions.
The long-run equilibrium price in this industry is

• A) $15.
• B) $10.
• C) $5.
• D) $5 for some firms and $10 for others.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset loses value at double the rate of its straight-line depreciation.

Units-Of-Activity

A method for allocating depreciation based on the actual usage, work, or units of production of the asset, rather than passage of time.

Residual Value

The approximate worth of an asset when it reaches the end of its usable life.

Depreciable Cost

This refers to the total cost of an asset that is subject to depreciation over its useful life, including the purchase price and any additional costs necessary to make the asset usable.