Advanced Placement (AP) Human Geography Practice Exam

What does outsourcing generally refer to?

1. Local production for local consumption

2. Production of goods abroad for domestic sale

3. In-house production of goods

4. Freelancing work done by local businesses

The correct answer is: Production of goods abroad for domestic sale

Outsourcing generally refers to the practice of contracting out certain business functions or production processes to external companies or suppliers, often located in different countries. This is primarily done to reduce costs, access specialized skills, or increase efficiency. The process often involves the production of goods or services in another country that are then sold domestically. This means that a company may shift its manufacturing operations to a country where labor and production costs are lower, thereby enhancing its competitiveness in the domestic market. The other options focus on different concepts. Local production for local consumption emphasizes a self-sufficient economy without the outsourcing aspect. In-house production refers to businesses creating goods within their own facilities, which contrasts with outsourcing. Freelancing involves independent contractors providing services locally, which is different from the broader scope of outsourcing that deals with production and operational functions, often transnationally.