A Decision to Make a Component Internally Versus Through a Supplier

question 74

Multiple Choice

A decision to make a component internally versus through a supplier is a

• A)special-order decision.
• B)keep-or-drop a product-line decision.
• C)make-or-buy decision.
• D)Both a and c are correct.

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Definitions:

Willingness to Pay

The maximum amount an individual is prepared to spend for acquiring a good or service, reflecting their valuation of the item.

Consuming Benefit

Consuming benefit pertains to the utility or satisfaction a consumer derives from purchasing and using a product or service.

Consumer Surplus

The disparity between the price consumers are inclined to pay and what they truly disburse for a good or service.

Miguel's Consumer Surplus

The difference between what Miguel is willing to pay for a good or service and what he actually pays, measuring the benefit or surplus value he receives.