The Replacement of the Phonograph by the Cassette Tape Player

question 117

Multiple Choice

The replacement of the phonograph by the cassette tape player and the eventual replacement of the latter by CD and MP3 players is an example of

• A) economies of scale.
• B) planned obsolescence.
• C) diseconomies of scale.
• D) creative destruction.

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Definitions:

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Production Function

An equation that describes the relation between inputs used in production and the output of goods or services.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Commodity

A basic asset deployed in commercial transactions that is exchangeable with other assets of the same classification.