Which of the following is an example of outsourcing?
a. When production of economics textbooks, management textbooks, and finance textbooks can be done by a single publishing company at lower average cost than by separate publishing companies that specialize in just one topic.
b. When a firm produces 600,000 units per month to realize the minimum average cost of producing a unit of output.
c. When a firm finds that it is more profitable to contract for certain inputs or functions supplied by others than to produce those inputs or functions itself.
d. When a steel company integrates backward to mine iron ore and even the coal used to smelt iron ore.
c
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As a component of aggregate demand, investment refers to the
A) purchase of raw land for later resale B) purchase of stocks and bonds C) purchase of new equipment and additional inventories D) difference between people's income and spending E) dividends paid out to shareholders
Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price. What is the greatest deterrent to this strategy?
A) One of the firms may decide to lower its price and take business away from the firm that charged the high price. B) The firms may find that the price they charge is greater than the price that would maximize their profits. C) An agreement by firms to charge high prices is illegal. The government can fine the firms and send their managers to jail. D) Consumers may resent having to pay high prices and not buy from either of the firms.