When a Firm Has Been Making Goods and Services In-House

question 51

Multiple Choice

When a firm has been making goods and services in-house, and then decides to buy these goods and services from suppliers, it is called _____.

• A) outsourcing
• B) domestic manufacturing
• C) global farming
• D) offshoring
• E) insourcing

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Definitions:

Monopoly Profit

The excess profits a monopoly firm earns over what it would earn if the industry were perfectly competitive, due to its control over the market supply and pricing.

Profit Maximizing

A strategy or point where a firm or individual produces at a level where the difference between total revenue and total cost is the greatest.

P = MC

The condition where price equals marginal cost, often used to determine the optimal level of output in perfect competition.

Monopolist

A sole provider of a good or service in a market, having significant control over prices and market conditions.