Which of the Following Exemplifies an Opportunistic Behavior by a Franchisor

question 63

Multiple Choice

Which of the following exemplifies an opportunistic behavior by a franchisor arising out of incompleteness or ambiguity in a contract?

• A)Providing inferior service in an attempt to cut operating costs.
• B)Terminating a well-operated franchisee and converting the establishment into a profitable company-owned outlet.
• C)Fixing exorbitant prices for products having relatively elastic demand.
• D)Terminating a franchisee who had been using the company brand name to endorse products that the agreement says it cannot.

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Definitions:

Long-Run Supply

The total quantity of goods or services that a market can produce and provide over a long period, considering all relevant input adjustments.

Lowest Price

The minimum cost at which a product or service is offered in the market.

Short Run

A period of time in economics during which at least one input, usually capital, is fixed and cannot be changed.

Efficient Output

The level of production at which a company or economy can produce the maximum amount of goods and services with the least waste of resources.