Explain Why Costs Must Be Covered by Prices

question 66

Essay

Explain why costs must be covered by prices.

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Definitions:

Automobile Industry

A sector that encompasses companies involved in the design, manufacture, marketing, and selling of motor vehicles.

Household Appliance Industry

The sector of the economy focused on manufacturing and selling electrical or mechanical machines used in homes, such as refrigerators, washers, or ovens.

Differentiated Oligopoly

A market structure where a few companies dominate the market, but they offer products that are distinct from each other in some way, allowing for competition.

Pure Competition

A market structure characterized by a large number of buyers and sellers, similar products, and free entry and exit, leading to price determination by supply and demand forces.