Economists Study Decreasing Cost Industries in Order to Explain

question 196

Multiple Choice

Economists study decreasing cost industries in order to explain:

• A) why profits may remain above normal in the long run for some firms.
• B) the existence of industry clusters.
• C) economies of scale.
• D) why supply curves slope upward.

---

Definitions:

Outdated Costing System

A costing system that no longer accurately reflects the current production operations or costs, leading to misinformed pricing or investment decisions.

Profit Margins

The percentage of revenue that remains as profit after all expenses have been deducted from sales.

Special Product Cost Projects

Involves the detailed analysis and calculation of costs associated with creating a product that is unique or outside the standard product line.

Cost Driver

A factor that influences or contributes to the expense of certain business operations.