When Firms Are Neither Entering nor Exiting a Perfectly Competitive

question 100

Multiple Choice

When firms are neither entering nor exiting a perfectly competitive market,

• A)total revenue must equal total cost for each firm.
• B)economic profits must be zero.
• C)price must equal the minimum of marginal cost for each firm.
• D)Both a and b are correct.

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Definitions:

Milling Department

A specific department within a manufacturing facility where material, such as metal or grain, is ground or processed.

Manufacturing Overhead

Costs in the production process that are not directly tied to the product, such as salary of supervisors and rent of the factory.

Milling Department

A department within a manufacturing facility where raw materials are ground, crushed, or cut into small pieces using machines like mills.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products, calculated by dividing estimated overhead costs by an allocation base, like direct labor hours or machine hours, before the period begins.