During the Summer of 2008,gas Prices Climbed to Unprecedented Levels

question 89

Multiple Choice

During the summer of 2008,gas prices climbed to unprecedented levels.Demand for large SUVs and trucks declined as consumers opted for smaller automobiles and hybrid cars.It is difficult for car companies to shift their production plants to accommodate this demand because:

• A) fordist systems are quite rigid, and production lines require an enormous amount of reinvestment in order to change
• B) the working conditions are such that people no longer want to work in the auto manufacturing industry
• C) the pay is too low for people to want to work in the auto manufacturing industry
• D) U.S. workers prefer to work for Korean carmakers that provide a more stimulating environment
• E) the manufacture of hybrids takes a higher level of skill than making SUVs or trucks, and there is not enough skilled labor to make the change

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Definitions:

Units

Basic measures or quantities, such as length, mass, time, etc., that serve as standards for expressing and comparing quantities.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Units

Basic quantities or measures adopted by convention or by law, used as a standard to express physical quantities.

Diminishing Returns

An economic principle where the addition of a variable factor to a fixed factor leads to a decrease in the marginal output of the variable factor beyond a certain point.