The Figure Given Below Shows the Cost and Revenue Curves

question 32

Multiple Choice

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-When the existing firms in a monopolistically competitive industry earn above-normal profit:

• A)new firms enter into the market, and entry continues until firms earn normal profit.
• B)new firms have no incentive to enter the market.
• C)new firms have an incentive to enter the market but are legally barred from doing so.
• D)they increase their production and lower the price level.
• E)their cost structure automatically changes, eliminating the additional profit.

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Definitions:

Direct Labor Cost

The expense of labor that can be directly attributed to the production of goods or services.

Net Operating Income

A company's revenue minus its operational direct and indirect costs, excluding taxes and interest.

Net Operating Income

Earnings from a company's regular activities before taxes and interest, used to gauge the company's operational efficiency.

Absorption Costing

Absorption costing is an accounting method that includes both variable and fixed manufacturing costs in the cost of a product.