What is outsourcing and what forms does it take?
What will be an ideal response?
Outsourcing is when a firm obtains a part or service from an external firm. At one extreme, we have spot markets where an exchange is made immediately at the current market price with no long-term contractual obligations. At another extreme are vertically integrated firms which produce everything internally. We also have long-term contracts between independent agents-distributors, suppliers, franchises, leasing contracts etc.
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A natural monopoly is characterized by large fixed costs relative to variable costs
Indicate whether the statement is true or false
Southwest Airlines relies on jet fuel to operate its planes. If it chooses to hedge against future changes in fuel prices, what positions (long or short) will it take in the spot and futures markets?
What will be an ideal response?
In monopolistic competition, in the long run customers pay a price that is
A) less than the minimum ATC. B) more than the minimum ATC. C) equal to both the minimum ATC and the minimum AVC. D) equal to the minimum ATC, but not equal to the minimum AVC.
A financial crisis is
A) not possible in the modern financial environment. B) a major disruption in the financial markets. C) a feature of developing economies only. D) typically followed by an economic boom.