When Firms Estimate the Costs of Outsourcing to Low-Wage Countries

question 65

True/False

When firms estimate the costs of outsourcing to low-wage countries, they often overlook problems such as long distances.

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Definitions:

Marginal Cost

The additional cost incurred in producing one more unit of a good or service, crucial for decision-making about production levels.

Learning Effects

These are reductions in production costs that occur due to learning and improving over time, as processes become more efficient with experience.

Marginal Costs

The increase in total cost that arises from an extra unit of production.

Marginal Benefit

The additional satisfaction or utility that a person receives from consuming an additional unit of a good or service.