Which of the Following Is TRUE About Outsourcing

question 145

Multiple Choice

Which of the following is TRUE about outsourcing?

• A) Outsourcing allows firms to be more flexible, and requires minimal coordination.
• B) Outsourcing allows firms to concentrate on those areas in which they can create value.
• C) Outsourcing strengthens the creative and innovative functions within the firm.
• D) Outsourcing is only effective when it includes all support activities.

Recognize the conditions under which firms enter or exit the market.

Comprehend the relationship between price, average total cost, and marginal cost in long-run equilibrium.

Analyze the impact of consumer demand changes on market equilibrium in different types of industries.

Understand the concept of allocative efficiency and its relevance to purely competitive markets.

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Definitions:

Back Orders

Orders for goods or services that cannot be filled at the current time due to lack of supply.

Inventory Holding Cost

Expenses incurred from storing unsold goods or materials, including storage costs, insurance, deterioration, and obsolescence.

Overtime Cost

The additional expenses incurred by a company when workers work beyond their normal working hours, usually at a higher pay rate.

Stockout Cost

The cost incurred when inventory is not sufficient to meet demand, potentially leading to lost sales and customer dissatisfaction.