Question

If the assets required are specific to a firm and cannot be used by others, outsourcing to a third party is likely to increase the surplus.

a) True
b) False

Answer 1

Outsourcing to a third party can increase the surplus by leveraging the expertise and resources of that party.

Step-by-step explanation:

If the assets required are specific to a firm and cannot be used by others, outsourcing to a third party is likely to increase the surplus.

This statement is True.

When a firm outsources to a third party, it can benefit from the expertise and resources of that party, which can lead to increased efficiency and productivity. By focusing on its core competencies and leveraging the specialized knowledge of the third party, the firm can optimize its operations and generate higher surplus.