An Attempt to Explain That Vertical Integration Is More Efficient

question 14

Multiple Choice

An attempt to explain that vertical integration is more efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market becomes too great has been proposed by

• A) population theory.
• B) institution theory.
• C) freakonomics.
• D) transaction cost economics.
• E) transaction growth theory.

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Definitions:

Optimal Order

An optimal order refers to the most efficient, cost-effective quantity of items to purchase or produce that minimizes total costs including ordering, holding, and shortage costs.

Black Market

An illegal trading environment where goods or services are exchanged outside of authorized channels.

Bookstore

A retail establishment that primarily sells books, often alongside related items such as magazines and stationery.

Corpulent Tourists

Overweight or obese travelers who may have specific needs or considerations in the tourism industry.