KPL Inc Is an Outsource Vendor

question 86

Multiple Choice

KPL Inc. is an outsource vendor. It handles the recruiting process for Numero Uno Computers. KPL recently changed its business strategy to a more profit-oriented one. This modification would require the company to charge more for its services. This change will be a ________ risk for Numero Uno Computers.

• A) de facto sole source
• B) benefits outweighed by long-term costs
• C) no easy exit
• D) loss of control
• E) high unit cost

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Definitions:

Optimal Quantity

The amount of a good or service that achieves the best balance between cost and benefit.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, which should not influence current or future business decisions.

Save a Life

Save a Life refers to actions or interventions taken to prevent someone from dying.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production volume varies.