The Traditional View of Monopolistic Competition Holds That This Type

question 59

Multiple Choice

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

• A)there are too few firms to reach an efficient level of production.
• B)firms do not operate at the output that minimizes average costs.
• C)more advertising is needed to inform customers about product differences.
• D)consumers do not have enough choice among the product varieties available.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Net Operating Income

The profit generated from a company's normal business operations, excluding non-operating income and expenses.

Materials Quantity Variance

Materials quantity variance is the difference between the actual quantity of materials used in production and the expected quantity, based on standard usage rates.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, used to assess efficiency in purchasing raw materials.