Philip Is an Average Contractor in Town, and He Earns

question 159

Multiple Choice

Philip is an average contractor in town, and he earns $40,000 a year. Billy is the best contractor in town, and he earns $480,000 a year. Philip's contracting services

• A)are valued more by the market relative to Billy's and that explains why his income is higher than Billy's.
• B)are valued less by the market relative to Billy's and that explains why his income is higher than Billy's.
• C)are valued less by the market relative to Billy's and that explains why his income is lower than Billy's.
• D)are more expensive because he receives a compensating differential.

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Definitions:

Situation Assessment

An analysis of the internal and external environment of a company to understand its current condition and identify opportunities and threats.

External Factors

Elements outside of an organization's control that can affect its performance and strategy.

Primary

Refers to first in order, importance, or original sources of information obtained directly from first-hand experience or research.

Economies of Scope

Cost advantages that a business experiences by producing a wider variety of products, rather than specializing in the production or provision of a single product or service.