Some Consumer Electronics Products Such as OLED TVs, Blu-Ray Players

question 195

Multiple Choice

Some consumer electronics products such as OLED TVs, Blu-ray players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies) .Which of the following is the best explanation for this observation?

• A)More firms are likely to enter the consumer electronics market over time, forcing market prices down.
• B)Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait.
• C)Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods.
• D)After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive consumers.

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Definitions:

Prime Costs

The combination of direct materials and direct labor costs.

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or services.

Direct Materials

The raw materials that are directly used in the manufacturing of a product, easily traceable to the finished product.

Equivalent Units Of Production

The number of production units that could have been completed within a given accounting period, given the resources consumed.