Table 13-3 Table 13-3 Shows the Demand and Cost Schedules for a and Cost

question 110

Multiple Choice

Table 13-3

Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What is the best course of action for the firm in the short run?

• A)It should shut down.
• B)It should stay in business because it covers some of its fixed cost.
• C)It should increase its sales by lowering its price.
• D)It should not cut its price but it should increase its sales by advertising.

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Definitions:

High-cost Items

Products or services that have a significant purchase price or maintenance cost.

Periodic Inventory System

An inventory system where inventory levels and the cost of goods sold are updated in the accounting records periodically, often at the end of an accounting period.

Gross Profit Method

An accounting technique used to estimate the amount of inventory a company has by using the gross margin percentage.

Control of Inventory

The process of overseeing and managing the ordering, storage, and use of components that a company will use in the production of the items it will sell as well as the management of quantities of finished products for sale.