Automobile Companies Typically Make Some of the Parts for Cars

question 48

Multiple Choice

Automobile companies typically make some of the parts for cars (for example, the body and engine) but not others (for example, the tires) . Under what conditions would you expect an automobile manufacturer to be most likely to buy inputs from other companies?

• A) when the specifications (size, style, etc.) of the inputs change frequently
• B) when the inputs being produced have little value
• C) when market prices have not been established for the inputs
• D) when it is relatively easy to measure the quantity and quality of the input

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