Sometimes a Company Can Make a Product That Is Too

question 41

True/False

Sometimes a company can make a product that is too reliable.An example of this would be a computer that cost a large premium over competition but would last for years.The problem is that technology changes too rapidly so better,cheaper,and faster models will come out and make the expensive,long-lasting model obsolete.

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Definitions:

Explicit Costs

Dollar costs incurred by business firms, such as wages, rent, and interest.

Implicit Costs

The opportunity costs that are not directly incurred but represent the loss of alternative benefits when choosing one option over another.

Explicit Costs

Direct, out-of-pocket payments for goods and services required to run a business.

Accounting Profit

Sales minus explicit cost. Implicit costs are not considered.