If the Minimum Efficient Scale in the Production of Rubber

question 89

Multiple Choice

If the minimum efficient scale in the production of rubber exceeds the quantity of rubber any individual tire producer buys,

• A)tire producers should integrate backward into rubber production
• B)there will be a monopoly in rubber production
• C)tire producers should not integrate backward into rubber production
• D)tire producers will be charged prices above what the cost of producing rubber themselves would be
• E)tire companies will switch to fiberglass

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Definitions:

Decentralized

Refers to the distribution of decision-making powers away from a central authority, allowing for greater input and autonomy at the local or divisional levels.

Divisional Structures

An organizational framework where the entity is divided into semi-autonomous units or divisions, each responsible for a particular business function or geographic area.

Functional Specializations

The division of work into distinct areas, each with its own expertise and responsibilities, within an organization.

Functional Structures

An organizational design where departments are divided based on specific functions or roles, such as marketing, finance, and operations.