Which of the Following Is True

question 148

Multiple Choice

Which of the following is true?

• A) Since there are few firms that match the conditions assumed in perfect competition, the model is not very useful.
• B) The model of perfect competition is a good example of the old adage, "That's O.K. in theory, but not in practice."
• C) Although few world markets meet the assumptions of perfect competition, the model is useful in analyzing real world forces that affect prices and outputs.
• D) The model of perfect competition comes very close to describing the real world.

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Definitions:

Fixed Budget

A budget that is established at the beginning of a period and does not change, regardless of actual performance or outcomes.

Direct Labor Rate

The cost per hour for direct labor, which includes wages of workers who are directly involved in the production of goods.

Efficiency Variances

Represents the difference between the actual input costs and the standard input costs anticipated for the production achieved.

Sales Price Variances

The difference between the actual price at which goods or services are sold and the expected (standard) sale price.