In the 1980s,"voluntary Restrictions" on Automobile Imports Raised the Prices

question 13

Essay

In the 1980s,"voluntary restrictions" on automobile imports raised the prices of Japanese cars by $1,000,of European cars by $2,000,and of American cars by $500.During the period following these restrictions,both Japanese and European automakers opened parts and assembly plants in the US.Why did this happen? How is it related to regulation?

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Definitions:

Overhead Cost

All costs on the income statement except for direct labor, direct materials, and direct expenses. Overhead costs relate to business operations and are not directly tied to a specific product or activity.

Activity Cost Pools

Categories in activity-based costing where costs are accumulated before being assigned to products or services based on their consumption of activities.

Machine-Hours

A measure of the amount of time machines are used in the production process, often used for allocating manufacturing overhead.

Batches

Quantities of material or products processed or produced at the same time in a manufacturing process.