In General, a Company Should Outsource If the Cost to Buy

question 54

Multiple Choice

In general, a company should outsource if the cost to buy is:

• A) Less than the sum of variable costs and fixed costs
• B) Less than the relevant variable costs
• C) Greater than or equal to (variable costs + relevant fixed costs - opportunity costs)
• D) Less than or equal to (variable costs + relevant fixed costs - opportunity costs)

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Definitions:

Gasoline

A combustible fluid obtained from petroleum, primarily utilized as a fuel in engines that operate through internal combustion.

Cost Function

An equation that calculates the total cost of production based on the quantities of inputs used.

Output

The total amount of goods or services produced by a company or a production process.

Cost Function

A mathematical relationship that describes how the costs incurred by a firm change with various levels of output.