Which of the Following Conclusions Can We Make About Vertical

question 18

Multiple Choice

Which of the following conclusions can we make about vertical integration with regards to product market share and scope?

• A)If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small.
• B)A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope
• C)A firm with multiple product lines will benefit more from being vertically integrated in the production of components for those products in which it can achieve significant market scale
• D)The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist
• E)If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists

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Definitions:

Z Isomer

Refers to an isomer where the highest priority groups on either side of a double bond or around a ring system are on the same side, following CIP priority rules.

1-Bromopentane

An organic compound classified as an alkyl halide, consisting of a five-carbon chain with a bromine atom attached to the first carbon.

Acetone

A colorless, volatile, flammable liquid ketone, widely used as a solvent and as a precursor to other organic compounds.

NaOH

Sodium hydroxide, a strong base used in many chemical reactions, including saponification and the neutralization of acids.