Companies Outsource Their Operations Because

question 158

Multiple Choice

Companies outsource their operations because

• A) the weather is nicer in other countries.
• B) employees in other countries take less sick leave.
• C) governments in other countries allow them to operate.
• D) labor costs are lower.
• E) no one wants to do the work domestically.

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Definitions:

Elastic Demand

A condition where the quantity demanded of a good or service is highly responsive to changes in its price.

Output Effect

The impact on total revenue when a firm changes its output level, considering demand elasticity.

Substitution Effect

The change in consumption patterns due to a relative change in prices leading consumers to substitute one product for another.

Derived Demand

The demand for a good or service that arises from the demand for another good or service; for example, the demand for steel is derived from the demand for cars.