Micro Computer Company Has Set Up a Toll-Free Telephone Line

question 57

Multiple Choice

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?

• A) Product cost
• B) Manufacturing overhead
• C) Direct labor
• D) Period cost

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Definitions:

Monopolistic Competitor

In market economics, a monopolistic competitor refers to a company operating in a sector filled with competitors, yet it has enough differentiation to have some control over its pricing.

Downward Sloping

A description of a curve or line that shows a decrease in one variable as another variable increases, commonly seen in demand curves.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded by consumers.

Perfect Competition

Perfect Competition is a market structure characterized by a large number of small firms, identical products sold by all firms, no barriers to enter or exit the market, and perfect knowledge of prices and technology.