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In the Long Run,the Price of a Product Is Determined

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In the long run,the price of a product is determined by the cost of production and the length of the firm's supply chain.


Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, not yet sold.

Manufacturing Costs

The total expense involved in manufacturing a product, including direct materials, direct labor, and overhead costs.

Direct Materials

The raw materials directly used in the production of a product, easily traceable to the finished good.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing costs in the cost of a product.

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