34 In monopolistic competition in the long run firms produce. Prices are based on costs subject to the constraint that customers and competitors will exert an influence.
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Pricing decisions tend to heavily involve analysis regarding marginal contributions to revenues and costs.
. Regarding all of its resource levels rather than just a few. Monopolistic competition is a market structure in which few firms sell similar products. In a competitive market firms may produce quantity Q2 and have average costs of AC2.
They result in maximizing return on investment. Prices are determined by the market subject to the constraint that costs must be covered in the long run. AMarginal cost equals average total cost.
Both quantitative and qualitative impacts should beconsidered0 1. The price needs to be sufficient enough to break-even C. A excess capacity exists.
CPrice exceeds marginal cost. 2 Companies that produce high quality products do. B the markup is equal to zero.
C the demand curve has shifted so that it intersects the minimum average total cost point. The long-run average cost curve is at a minimum at a level of output where. It is true that the long run average cost curve is comprised of all the lowest points of each of the short run average cost curves because no firm will operate at a level of higher per-unit costs in the long run than in the short run.
A firm actually has a more difficult and complex series of decisions in the long-run than in the short-run. A monopoly can produce more and have lower average costs. Long run average costs in monopoly.
All of the given answers i. Marginal cost is at a minimum. Again consider our simple production process with only two inputs.
The sales price of a special order should never be below the priceoffered to regular customers. 2 Which of the following would not be a factor in the consideration. A balance of market forces and cost is important when making pricing decisions.
Average variable cost is at a minimum. If your costs push prices above their perceived value they simply wont buy. If the perceived value is much higher than your costs theyll happily pay a price that gives you a huge margin.
This enables efficiency of scale. Ii and iii D. Special order decisions are long-rundecisions.
The long run average cost curve makes the assumption that the firm has selected the best factor mix possible in terms of the production of outputs. A Companies get profit from selling products only when they are the price makers. None of the above is correct.
They include adjusting product mix in a competitive environment B. It is assumed monopolies have a degree of economies of scale which enables them to benefit from lower long-run average costs. 33 In the long run monopolistically competitive firms produce where.
Which of the following are true regarding long-run pricing decisions. Question content area bottom Part 1 A. B Companies supply products as long as the price the customer is willing to pay for its products exceeds the.
123 Understand how companies make long-run pricing decisions. Similar to firms in perfectly competitive markets firms in monopolistically competitive markets can enter and exit the market without restriction so profits are driven to zero in the long run. To provide information for economic decisions 2.
Which of the following statements is true of costs and pricing decisions. 13-3 Four purposes of cost allocation are as follows. Both quantitative and qualitative impacts should be considered.
Whether or not the company has excess capacity is seldom a consideration for special order decisions. BPrice equals average total cost. Which of the following statements is true of costs and pricing decisions.
The sales price of a special order should never be below the price offered to regular customers. Average fixed cost is at a maximum. Use prices that include a reasonable return on invested capital D.
1 When prices are set in a competitive marketplace product costs are the most important influence on pricing decisions. Consider again the short-run. DThe firms economic profit equals zero.
Whether or not the company has excess capacity is seldom a consideration. To motivate managers and other employees 3. 11 12 Which one of the following statements is TRUE for BOTH perfect competition and.
B Companies supply products as long as the price the customer is willing to pay for its products exceeds the. Long-Run Production and Costs. A Companies get profit from selling products only when they are the price makers.
11 Which of the following is FALSE regarding the long run for a firm in monopolistic competition. D average total cost is minimized. The firm is experiencing constant returns to scale.
Special order decisions are long - run decisions. It is equal to long-run marginal cost. It is more likely that full product costs will be relevant costs for long-run pricing decisions.
Customers are willing to pay what they think something is worth and dont really care about your costs. Specifically firms tend to accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost and then charging a price which is determined by the demand curve.
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