Why Should a Firm Be Cautious About Entering a Licensing

question 61

Essay

Why should a firm be cautious about entering a licensing agreement?

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Definitions:

Average Product

The output per unit of input, calculated by dividing total product by the quantity of input.

Labor

The physical and mental effort used in the production of goods and services.

Marginal Product

The increase in output that arises from an additional unit of input.

Nonlabor Resources

Resources used in the production process that do not involve human labor, such as capital, land, and raw materials.