Each Year Apple Computers Produces a New Line of IPods

question 41

Essay

Each year Apple Computers produces a new line of IPods with greater storage capacity and more features. Sales continue to soar even though the prices each year rise as well. Is this a refutation of the law of demand or is there something else going on here that doesn't meet the eye?

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Definitions:

Indirect Cost

Costs that are not directly traceable to a specific project, product, or activity and usually include overheads such as administration and utilities.

Direct Cost

Costs directly associated with the creation of specific products or services, including raw materials and wages.

Prime Costs

The combined costs of raw materials and direct labor that are directly attributable to the production of goods.

Conversion Costs

The costs incurred to convert raw materials into finished products, including labor and manufacturing overhead expenses.