Which of the Following Statement(s) Is/are TRUE

question 37

Multiple Choice

Which of the following statement(s) is/are TRUE?
I. Because monopolistically competitive firms sell differentiated products, their demand curves are downward sloping.
II. Monopolistically competitive firms earn above-normal profits because of high entry barriers.
III. As firms enter a monopolistically competitive industry, the demand curves of the existing firms shift down and to the left.

• A) I and III only
• B) I and II only
• C) II only
• D) III only

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Definitions:

Product Costs

Product costs are the costs directly associated with the creation of a product, including material, labor, and overhead expenses.

Absorption Costing

A bookkeeping approach that encompasses all costs associated with production, including direct materials, direct labor, along with both variable and fixed overhead expenses, into the product's cost.

Product Cost

The total expense incurred to produce and prepare a product for sale, including direct materials, labor, and overhead.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.