One Reason Why, in the Last Four Decades, the Number

question 26

Multiple Choice

One reason why, in the last four decades, the number of new auto makers in the world has been very small compared to the past is that

• A)the automobile cannot be improved upon in any way by new producers.
• B)new auto makers cannot obtain necessary inputs to produce new cars.
• C)governments restrict who can produce automobiles.
• D)new producers cannot match the economies of scale of existing auto makers.

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Definitions:

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the production of goods.

Direct Materials Costs

Costs that are directly traceable to the production of specific goods or services, such as raw materials used.

Direct Labor Costs

Expenses related to employees who directly contribute to the production of goods or services, such as wages for assembly line workers.

Period Costs

Costs that are expensed in the period they are incurred rather than being capitalized or included in the cost of goods sold, such as selling, general, and administrative expenses.