Which of the Following Conclusions Can We Make About Vertical

question 9

Multiple Choice

Which of the following conclusions can we make about vertical integration with regards to asset specificity?

• 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 a larger share of the product market will benefit more from vertical integration than a firm with a smaller share of the product market
• 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

Recognize the concept of British thermal units (BTUs) and their relevance to energy discussions.

Identify the environmental impact of human activities measured in terms of waste generation.

Grasp the dynamics of supply and demand in the context of productive resources.

Realize the significance of renewable energy sources in U.S. electricity generation.

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Definitions:

Negative Reinforcer

An aversive event or condition that is removed following a desired behavior, thereby increasing the likelihood of that behavior being repeated.

Aversive Event

An unpleasant or harmful event or experience that can induce behavioral changes or psychological stress.

Escape Response

A behavior aimed at moving away from or avoiding a threatening or unpleasant stimulus.

Kaizen

A Japanese term meaning "change for better" or continuous improvement, it is a process of ongoing, incremental improvements in efficiency, productivity, or quality.