One Reason Why Firms Replace Markets for Some Activities Is

question 287

Multiple Choice

One reason why firms replace markets for some activities is that firms

• A) reduce the number of transactions required.
• B) enable individuals to avoid a large portion of their taxes.
• C) reduce the rate at which the product is wasted.
• D) do not require team production.

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Definitions:

Target Cost

The maximum amount that can be spent on a product while still earning the desired profit margin, usually determined during the design and development stages.

Investment

Assigning financial resources with the aim of achieving returns or making a profit.

Desired Return

The target profit or income level that an investor or business aims to achieve on an investment or project.

Target Cost

The estimated price for a product that would allow a company to achieve a desired profit margin while remaining competitive in the market.