Outsourcing Occurs When a Firm

question 63

Multiple Choice

Outsourcing occurs when a firm:

• A) buys one of its rivals.
• B) merges with one of its suppliers.
• C) enters into a joint venture with a rival.
• D) hires another firm to perform value creation activities.
• E) enters into contracts with two suppliers simultaneously.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing stability to a company's expenses.

Variable Costs

Expenses that vary in direct proportion to changes in levels of production or sales activity, such as raw materials and direct labor costs.

Net Loss

The amount by which expenses exceed revenues.

Variable Costs

Expenses that vary in relation to the quantity of products or services a company generates.