Purchasing a Product or Service from an Outside Contractor That

question 14

Multiple Choice

Purchasing a product or service from an outside contractor that had been previously provided internally is called

• A) vertical integration.
• B) horizontal integration.
• C) transaction costing.
• D) outsourcing.
• E) geographic integration.

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Definitions:

Short Run

A period in economics where at least one input is fixed and cannot be changed, limiting the ability to increase production.

Long Run

A period of time in economics wherein all inputs and factors of production can be varied, with no fixed factors.

Variable Inputs

Resources or factors of production that can be adjusted in the short run to meet changes in demand.

Diminishing Returns

An economic concept indicating that as more investment is made in a particular area, the rate of profit from that investment, after a certain point, starts to decline.