When a Firm Allows Others to Use an Entire Business

question 21

Multiple Choice

When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________.

• A) industrial design rights
• B) franchising
• C) joint venture
• D) equity venture

---

Definitions:

Share

A unit of ownership in a corporation or financial asset that provides an equal distribution in any profits, in the form of dividends, and assets if the company is dissolved.

Operational Efficiency

The ability of an organization to minimize waste and maximize outputs from given inputs, often through improvements in processes and technology.

Residual Claimants

Individuals who personally receive the excess, if any, of revenues over costs. Residual claimants gain if the firm’s costs are reduced or revenues increase.

Market Wages

The prevailing pay rates for work in a particular market or industry, determined by supply and demand dynamics.