If the Demand Curve Facing the Acme Awl Company Is

question 67

Multiple Choice

If the demand curve facing the Acme Awl Company is tangent to its average total cost curve, all of the following statements are true except one.Which is the exception?

• A)Economic profit is zero.
• B)A normal profit exists.
• C)Marginal cost must exceed marginal revenue.
• D)Acme has excess capacity.
• E)Firms have no incentive to enter or leave this industry.

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Definitions:

Inventory Service Costs

Expenses associated with storing, handling, and managing inventory, including warehousing and insurance costs.

Independent Demand Items

Products or services for which demand is influenced by market conditions and customer preferences, not related to the production plans for other items.

Production Schedule

A detailed plan outlining the timing and sequence of production activities necessary to complete a manufacturing process.

MRP II

Stands for Manufacturing Resource Planning, an integrated method of operational and financial planning for manufacturing companies, improving overall production efficiency.