Which of the Following Is a Drawback of Management Contracting

question 79

Multiple Choice

Which of the following is a drawback of management contracting?

• A) It prevents a company from setting up its own operations for a period of time.
• B) It is a high-risk method of getting into a foreign market.
• C) It yields income to the contracting firm only much later in the process.
• D) It does not provide the option of buying shares in the managed company later on.
• E) It requires a domestic firm to export its products to a foreign company.

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Definitions:

Marginal Cost

The increase in cost resulting from the production of an extra product or service unit.

Marginal Cost

The cost of producing one more unit of a good or service, which may change with the level of output.

Fixed Cost

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.

Total Cost

The total of all costs associated with producing goods or services, encompassing both constant and fluctuating expenses.