Vertical Integration May Afford Flexibility in Responding to Uncertain Demand

question 28

Multiple Choice

Vertical integration may afford flexibility in responding to uncertain demand when

• A)the firm has built a capability to respond speedily in a coordinated fashion.
• B)the firm maintains spare capacity, and can bear spare capacity.
• C)the market cannot respond as quickly, or capacity is unavailable.
• D)all of the above.

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Definitions:

Energy of Activation

The minimum amount of energy required to start a chemical reaction, often lowered by the presence of a catalyst.

Existing Bonds

Bonds that have already been issued and are currently traded in the bond market.

Required

Necessary or needed for a particular purpose or result.

Catalysts

Substances that increase the rate of a chemical reaction without being consumed in the process.