If the Firms in a Perfectly Competitive Market Are Continually

question 213

Multiple Choice

If the firms in a perfectly competitive market are continually operating where their total costs exceed their total revenue in the short run,then in the long run

• A)the number of firms in the market will remain unchanged
• B)the number of firms in the market will increase
• C)the number of firms in the market will decrease
• D)existing firms will increase their plant sizes
• E)existing firms will increase their output

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Definitions:

Predetermined Factory Overhead Rate

The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the estimated total factory overhead costs by the estimated activity base at the beginning of the fiscal period.

Factory Overhead Costs

Expenses related to running a factory that cannot be directly attributed to specific units produced, such as maintenance and utilities.

Value-Added Time

The portion of the production process where actual value is added to the product, as opposed to non-value-added activities.

Processing Time

The amount of time required to complete a particular process, often used in manufacturing and computer operations.