In a Purely Competitive Industry, an Optimal Allocation of Scarce

question 127

Multiple Choice

In a purely competitive industry, an optimal allocation of scarce resources occurs when

• A) P = AC.
• B) ^{P = MC.}
• C) MR = AC.
• D) TR = TC.

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Definitions:

Indirect Materials

Materials used in the support of the production process that are not easily traced to specific products, essential for maintaining production equipment.

Favorable Variance

A financial term indicating that actual costs were less or actual revenues were more than what was budgeted or forecasted.

Variable Cost

Variable costs vary directly with the level of production output, including expenses like raw materials and direct labor.

Flexible Budget

A dynamic budget that recalibrates based on fluctuations in operational volume or activity.