When a Company Contracts with Suppliers in Other Countries to Make

question 6

Multiple Choice

When a company contracts with suppliers in other countries to make the various inputs that go into its products or to assemble the final products to reduce costs,_________________ occurs.

• A) inverted sourcing
• B) power distance
• C) global outsourcing
• D) shared services
• E) global downsizing

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Definitions:

Inferior Good

A type of good whose demand decreases as the income of consumers increases, opposite to normal goods.

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases, but price remains constant.

Income Range

The spectrum of income levels, from the lowest to the highest, that exists within a given population or among a specific group of individuals.

Substitution Effect

The economic principle that as the price of a good increases, consumers will replace it with cheaper alternatives.