A Contractual Agreement Between Two Firms That Allows One of the Firms

question 48

Multiple Choice

A contractual agreement between two firms that allows one of the firms to operate a retail outlet, using a name and format developed and supported by the other firm, is called:

• A)outsourcing.
• B)franchising.
• C)patenting.
• D)consulting.
• E)cross-licensing.

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Definitions:

Cost Functions

Mathematical representations that describe how production costs change with changes in the level of output.

Monopolistic Competitors

Firms operating in a monopolistic competition market structure, offering products that are differentiated from those of rivals but not completely unique.

Economic Profits

Profits calculated as total revenues minus explicit and implicit costs, differing from accounting profits by taking into account opportunity costs.

Marginal Cost

The escalation in total expenses incurred from creating an additional unit of a product or service.