In Monopolistic Competition,a Firm's Demand Curve Is Tangent to the ATC

question 106

Multiple Choice

In monopolistic competition,a firm's demand curve is tangent to the ATC curve in the long run because

• A)Barriers to entry are high.
• B)Entry eliminates economic profit,and exit eliminates losses.
• C)Advertising is ineffective in differentiating the product.
• D)Producers are price takers.

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Definitions:

Successful-efforts Method

An accounting method used in the energy industry for recognizing and capitalizing only those expenses associated with successfully locating new oil or natural gas reserves.

Full-cost Method

A method of accounting for all expenditures associated with the exploration and development of oil and gas reserves as capitalized costs, which are then amortized over the total volume of proven resources.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that is globally accepted for financial reporting.

Operating Asset

An Operating Asset is an asset used by a company in its day-to-day operations to generate revenue, such as machinery, buildings, or equipment.