In General, a Company Should Outsource If the Cost to Buy

question 54

Multiple Choice

In general, a company should outsource if the cost to buy is:

• A) Less than the sum of variable costs and fixed costs
• B) Less than the relevant variable costs
• C) Greater than or equal to (variable costs + relevant fixed costs - opportunity costs)
• D) Less than or equal to (variable costs + relevant fixed costs - opportunity costs)

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can purchase with a given income and prices of the goods.

Money Income

This term describes the total earnings received by an individual or household, including wages, salaries, and other forms of monetary income.

Substitution Effect

A phenomenon where consumers replace a more expensive item with a cheaper alternative when the price rises.

Product Quality

The attributes and characteristics of a product that determine its ability to satisfy customer needs and demands.