Exam 19: Vertical Integration and Outsourcing

If an important component of a firm's production process is difficult to specify in a contract and even more difficult to enforce in its production standards,then it probably makes sense to:

When a firm establishes a long-term contract with another firm whereby it acquires an asset such as a machine or a building through a rental agreement,it is called a:

Why aren't all economic transactions conducted through markets?

What limits the entire economy from being served by one gigantic firm that produces everything?

Which of these contract terms reduce transfer pricing problems?

What is outsourcing and what forms does it take?

When a corporation participates in more than one successive stage in a multi-stage production process,it is said to be:

When a firm purchases a part of its supplies from any one of a large number of potential suppliers at the current market price without long-term commitments,it is:

While firms buy many of their inputs through the open market,there is often a desire to produce critical inputs.A common concern in producing an input internally is that:

AutoCorp is a reputed automobile manufacturer while SUVmart is an independent distributor who buys automobiles from the former.During the current year,SUVmart wants to buy 250 Rhinos from AutoCorp who wants to charge an upfront franchise fee.The franchise fee charged by it:

A firm that produces its own output is engaging in ______ integration,while a firm that markets its own good is engaging in ______ integration.

The case of the Kodak - IBM outsourcing agreement for payroll software indicates that ______ can cause significant long-term holdup problems.

The nonmarket transactions refer to:

Catering,trucking,copying,and mainframe computing are among frequently outsourced services because these activities:

Agri-Tech supplies a patented sweetener to various food processors.It has noticed that the value of the sweetener varies dramatically from one buyer to another,depending on the end-use demand.But its experiments with charging higher prices to some buyers have failed because:

Autocorp faces the following demand function for its automobiles: P = 55,000 - 200 Q Its MC is $9,000.What will be its price if: (a)it decides to sell the automobiles by itself and (b)it sells though SUVmart,an independent distributor.What is the consequence of this exclusive dealing on prices?

AutoCorp faces a demand of P = $30,000 - 5 Q for its primary line of sporty mini-cars in Little Rock.The marginal cost of producing the car is $8,000.Discuss the implications of selling the new mini-car through its own dealership or through the local dealer: MiniMart.

Double markups refer to the tendency of the:

Specific assets can create problems for a company.If a supplier invests in new machinery to deliver a part useful only to its biggest and best customer,it can find itself with:

When asset specificity is very high and there is a lot of market uncertainty,then it is best for a firm to: