In Pure Competition, If the Market Price of the Product

question 11

Multiple Choice

In pure competition, if the market price of the product is higher than the minimum average cost of the firms, then

• A) some firms will exit the industry and the industry supply will decrease.
• B) other firms will enter the industry and the industry supply will increase.
• C) some firms will exit the industry and the industry supply will increase.
• D) other firms will enter the industry and the industry supply will decrease.

---

Definitions:

Job-Order Costing

A cost accounting system used to allocate costs to specific jobs or batches, useful for unique or custom orders.

Machine-Hours

A measure of production time, referring to the total hours a machine is operated within a specific period.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products.

Job-Order Costing

An accounting method used to track costs specifically associated with a given job or project.