Which of the Following Statements About a Monopolistically Competitive Firm

question 41

Multiple Choice

Which of the following statements about a monopolistically competitive firm in the short run is true?

• A)Profits will be maximized at the point at which price equals marginal cost and hence there is no deadweight loss.
• B)The firm may be able to earn a super normal profit in the short run and the long run.
• C)Entry into the market is difficult.
• D)Advertising may enable a firm to charge a higher price than that charged by rival firms.
• E)It faces a perfectly elastic demand curve

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Definitions:

Gross Profit Method

An inventory valuation method estimating the cost of goods sold and ending inventory based on gross margin percentages.

Gross Profit Ratio

A metric that shows the proportion of money left over from revenues after accounting for the cost of goods sold.

FIFO

FIFO stands for "First In, First Out," a method used in inventory management and accounting where the oldest inventory items are recorded as sold first.

Ending Inventory

The value of goods available for sale at the end of an accounting period, after accounting for all sales and purchases.