Service Firms Use Information Technology to Create Barriers to Entry

question 16

Multiple Choice

Service firms use information technology to create barriers to entry, generate revenue, enhance productivity, and serve as data base assets. Which cell in the matrix below is productivity enhancement?  

• A) (a)
• B) (b)
• C) (c)
• D) (d)

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Definitions:

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance.

Opportunity Cost

The loss of potential gain from other alternatives when a particular alternative is chosen.

Variable Manufacturing Costs

Costs in manufacturing that vary with the level of production output, including direct labor, materials, and utilities.

Direct Labor

The labor costs directly associated with the manufacture of products, typically wages for workers who physically produce the goods.