Franchising Is a Form of Business Ownership in Which a Firm

question 2

Multiple Choice

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for:

• A) an initial franchise fee and an ongoing royalty
• B) an initial franchise fee
• C) an equity position in the new business
• D) an ongoing royalty
• E) an initial franchise fee and an equity position in the new business

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Definitions:

Labor-Demand Schedule

A representation of the quantity of labor that employers are willing to hire at different wage rates.

Resource Demand

The demand for resources (inputs) required to produce goods and services, influenced by changes in output and productivity.

Purely Competitive

A market structure characterized by a large number of small firms, homogenous products, free entry and exit, and perfect information, leading to firms being price takers.

Marginal Revenue Product

The additional income yielded by deploying one more unit of a component, for instance, labor or capital.