A Firm Can Spend No Money and Time, Yet Expect

question 15

Multiple Choice

A firm can spend no money and time, yet expect to enhance its offerings, by:

• A) allowing other firms to contribute to its platform.
• B) going public through an initial public stock offering.
• C) outsourcing critical processes to third parties.
• D) adopting an envelopment strategy.
• E) preannouncing a forthcoming product to lower sales of current offerings.

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Definitions:

Fixed Costs

Costs that do not change with the level of output or activity, including salaries, rent, and insurance.

Activity Level

A measure of the amount of work or production a business undertakes, which can affect costs and efficiencies.

Total Cost Line

A graphical representation of how total costs change with changes in the level of activity or production volume.

Per Unit Cost

The cost associated with a single unit of product or service, calculated by dividing total costs by the number of units produced.