Practice Quiz

CLEP Microeconomics Exam Prep

Category - Microeconomics

Start a Study Session Sign up for Question of the Day
Johnson & Johnson managers have shifted production from an aloe vera based hand cream to an oat based one. The cost of the shift has increased by 12%. What is this phenomenon referred to as?
  1. Law of increasing costs
  2. Law of decreasing sales
  3. Product diversification
  4. Product integration
Explanation
Answer - A - This is referred to as the law of increasing costs.

Key Takeaway: The law of increasing costs dictates that when a company shifts production from one product to another, costs of production increase. Part of the reason for this increase is due to declining productivity.
Previous Next
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz