In Long-Run Equilibrium in a Monopolistically Competitive Market, Firms Typically

question 164

Multiple Choice

In long-run equilibrium in a monopolistically competitive market, firms typically:

• A)earn a normal profit.
• B)charge a price equal to marginal cost.
• C)earn an above-normal profit.
• D)charge a price equal to marginal revenue.
• E)suffer losses.

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Definitions:

Overapplied

A situation where the allocated manufacturing overhead costs exceed the actual manufacturing overhead costs incurred.

Denominator Activity

The total base activity used to allocate overhead costs in cost accounting, such as total direct labor hours or machine hours available.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used in allocating manufacturing overhead.

Overapplied

A condition where the manufacturing overhead allocated to products exceeds the actual manufacturing overhead costs incurred.