Paper 2 · June 2017 · Production and Operations

Subcontracting is best described as which arrangement?

ATwo firms merge all of their operations

BA firm sells through an agent

CAn outside party does part of the work

DA firm buys a supplier outright

Explanation

Under a subcontract an outside party carries out part of the production or supply on agreed terms, usually at a fixed price, while the contracting firm keeps responsibility for the finished product.

Derived from ZIMSEC Business Studies Paper 2, June 2017, Q1

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