A single restaurant and a chain are each considering whether to set up their own delivery service or contract with Deliveroo. What factor would make it more likely that the single restaurant should outsource deliveries.
A) Moral hazard.
B) Potential for holdup.
C) Lack of economies of scale.
D) None of the above.

Question

Quizplus · Accepted Answer

Lack of economies of scale makes it more likely for a single restaurant to outsource deliveries because it may not be cost-effective for them to maintain their own delivery service due to lower volume of orders compared to a chain. Outsourcing can provide access to a larger delivery network and reduce costs.

A Single Restaurant and a Chain Are Each Considering Whether