Which Firm's Market Is the Most Contestable

question 130

Multiple Choice

Which firm's market is the most contestable?

• A) the only cable TV provider in town
• B) the only sewer-and-water company in town
• C) the only hospital in town
• D) the only Chinese restaurant in town

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Definitions:

Fixed Overhead

Regular, fixed costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Capacity

The maximum amount of goods or services a company can produce or deliver in a given period with existing resources.

Allocation Base

A criterion or measure used for distributing overhead costs among various products, services, or departments within a business.

Traditional Costing

A costing method that allocates overhead based on a single predetermined rate, usually ignoring the varying demands different products place on resources.