To analyze outsourcing by firms, economists line up activities that a firm must

Question

To analyze outsourcing by firms, economists line up activities that a firm must undertake to produce a product in the rank order of the ratio of:

A)

low-cost to high-cost activities.

B)

high-skill labor to low-skill labor required for the activity.

C)

variable cost to fixed cost.

D)

manufacturing versus service activities.

To analyze outsourcing by firms, economists line up activities that a firm must undertake to produce a product in the rank order of the ratio of:

A)

low-cost to high-cost activities.

B)

high-skill labor to low-skill labor required for the activity.

C)

variable cost to fixed cost.

D)

manufacturing versus service activities.

Explanation / Answer

For outsourcing, the skill of the labor becomes utmost important since the cost of manufacturing is already high, that is why the firm is outsourcing. So it rarely is rarely interested in cost.

What matters to it is the fact that it can outsource its work to a highly skilled team of workers or a low skilled bunch of people.

Hence, option B is correct.

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