For the Monopolistic Competitor, Which of the Following Is INCORRECT

question 70

Multiple Choice

For the monopolistic competitor, which of the following is INCORRECT?

• A) Because the firm is not a perfect competitor, its demand curve slopes downward.
• B) The marginal revenue curve is downward sloping and lies below the demand curve.
• C) The profit-maximizing rate of output arises at the point at which the marginal cost curve intersects the marginal revenue curve.
• D) If the firm in a monopolistically competitive industry were making economic losses, new firms will enter the industry.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific products or projects based on their use of activities.

Overhead Assigned

The allocation of indirect costs or overhead to specific cost objects, such as products or jobs, based on a predetermined formula.

Traditional Costing

A cost accounting method that assigns manufacturing overhead costs to products based on volume-related measures.

Overhead Applied

The portion of estimated overhead costs that is allocated to each unit of production or activity based on a predetermined rate.