Which of the Following Are True Regarding Long-run Pricing Decisions

Again consider our simple production process with only two inputs. Monopolistic Competition ch.

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The firm is experiencing constant returns to scale.

. In a competitive market firms may produce quantity Q2 and have average costs of AC2. Whether or not the company has excess capacity is seldom a consideration. It is equal to long-run marginal cost.

33 In the long run monopolistically competitive firms produce where. 11 12 Which one of the following statements is TRUE for BOTH perfect competition and. Which of the following is true of long-run pricing.

Both quantitative and qualitative impacts should be considered. Special order decisions are long-run decisions. Average fixed cost is at a maximum.

To provide information for economic decisions 2. 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. B Companies supply products as long as the price the customer is willing to pay for its products exceeds the.

Customers are willing to pay what they think something is worth and dont really care about your costs. A monopoly can produce more and have lower average costs. A Companies get profit from selling products only when they are the price makers.

Special order decisions are long-run decisions. The sales price of a special order should never be below the price offered to regular customers. Which of the following statements is true of costs and pricing decisions.

Which of the following is true of long-run pricing. Whether or not the company has excess capacity is seldom a consideration for special order decisions. 13-3 Four purposes of cost allocation are as follows.

Long-Run Production and Costs. AMarginal cost equals average total cost. B the markup is equal to zero.

The sales price of a special order should never be below the price offered to regular customers. Prices are based on costs subject to the constraint that customers and competitors will exert an influence. Average variable cost is at a minimum.

The long-run average cost curve is at a minimum at a level of output where. All of the given answers i. It is fixed at a level that recovers the variable cost of the company and a pre-determined profit markup.

B It is generally a function of the market factors and the cost involved in production is generally not a consideration. A It is fixed at a level that recovers the variable cost of the company and a pre-determined profit markup. Regarding all of its resource levels rather than just a few.

The sales price of a. It is more likely that full product costs will be relevant costs for 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.

It is based only on internal requirements like cost. Which of the following statements is true regarding special order decisions. A excess capacity exists.

Long run average costs in monopoly. 2 Which of the following would not be a factor in the consideration of whether or not a special order should be accepted. BPrice equals average total cost.

C the demand curve has shifted so that it intersects the minimum average total cost point. 34 In monopolistic competition in the long run firms produce. Monopolistic competition is a market structure in which few firms sell similar products.

Ii and iii D. Pricing decisions tend to heavily involve analysis regarding marginal contributions to revenues and costs. D average total cost is minimized.

If your costs push prices above their perceived value they simply wont buy. 11 Which of the following is FALSE regarding the long run for a firm in monopolistic competition. If the perceived value is much higher than your costs theyll happily pay a price that gives you a huge margin.

CPrice exceeds marginal cost. Prices are determined by the market subject to the constraint that costs must be covered in the long run. To motivate managers and other employees 3.

None of the above is correct. 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. Marginal cost is at a minimum.

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. It is generally a function of the market factors and the cost involved in production is generally not a consideration. This enables efficiency of scale.

Special order decisions are long - run decisions. Consider again the short-run. DThe firms economic profit equals zero.

A balance of market forces and cost is important when making pricing decisions. A firm actually has a more difficult and complex series of decisions in the long-run than in the short-run. It is assumed monopolies have a degree of economies of scale which enables them to benefit from lower long-run average costs.

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