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Hickory Divine Is One of the Leading Manufacturers in the Hardwood

question 55

Multiple Choice

Hickory Divine is one of the leading manufacturers in the hardwood furniture industry. Hickory Divine has many small competitors, none of which controls a significant portion of the industry. Hickory, like most of the furniture manufacturers, sells its products to a broad variety of small furniture stores throughout the country, none of which represents a large percentage of Hickory's sales. When purchasing the products it uses for manufacturing its furniture, Hickory is able to choose from many suppliers since the wood it uses is an undifferentiated commodity, and Hickory is able to easily switch to any supplier that has the best price and delivery times. While growth in the hardwood furniture industry has historically been in the double digits, the industry growth rate has slowed considerably into the single digits, to approximately 5% in recent years; consumers have been purchasing less expensive furniture made of composite wood that is considerably less expensive than hardwood furniture but that looks and functions very similarly once it is painted.
-In this example, composite wood furniture would be an example of a(n)

Definitions:

Depreciation Expense

The allocated portion of the cost of a fixed asset, written off each year over the asset's useful life for accounting and tax purposes.

Scarcity

Occurs when the amount people desire exceeds the amount available at a zero price.

Choice

The act of selecting between two or more possibilities, often present in decision-making processes.

Economics

The study of how people use their scarce resources to satisfy their unlimited wants