One Advantage of Team Production Over Contracting Out Is That

question 141

Multiple Choice

One advantage of team production over contracting out is that

• A) the cost of negotiating and enforcing contracts is generally lower with team production than with contracting out.
• B) the principal agent problem is eliminated by team production but cannot be addressed in contracting out.
• C) costs are always lower with team production because of the elimination of transactions costs.
• D) efficiency is always greater with team production.

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Definitions:

Sourcing Decisions

Choices made by a company regarding the suppliers from which it procures goods, services, or raw materials, impacting costs, quality, and supply chain efficiency.

Optimal Quantity

The amount of a good or service that achieves the best balance between cost and efficiency in production and distribution.

Vertically Integrated

A business model in which a company controls multiple levels of its supply chain, from production to sales.

Order Quantity

the amount of inventory ordered at one time to replenish stocks, often determined by balancing ordering costs and holding costs.