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Scenario 8

question 142

Multiple Choice

Scenario 8.2 Use the following to answer the questions.
KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However, when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu items such as fried octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at the front of the store. This is a tradition for many restaurants in these countries to offer the customer passing by a preliminary view of their product.
Refer to Scenario 8.2. Suppose that KFC's parent company experienced difficulty in opening its restaurants in China unless KFC was willing to pay the government a "bribe". If KFC were to resort to paying this bribe in China saying that "it's different doing business there" this would be an example of

Definitions:

Total Fixed Costs

The overall sum of all costs that do not change with the level of output, such as rent, salaries, and insurance.

Total Costs

The aggregate expense incurred in the production and delivery of goods or services, combining direct, indirect, fixed, and variable costs.

Total Variable Costs

This represents the sum of all costs that vary with the level of output in the production process, such as materials and labor directly involved in making a product.

Average Fixed Costs (AFC)

The fixed costs of production (not varying with output) divided by the quantity of output produced; typically decreases as production increases.