When Increased Flexibility Is Required

question 14

Multiple Choice

When increased flexibility is required,

• A)it is always best to source inputs from the open market.
• B)it is always best to integrate key inputs, to maintain full control.
• C)it is best to operate with a mix of both options.
• D)it depends very much on the circumstances whether it's best to source from the market or vertically integrate.

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Definitions:

Excess Burden

The cost to society created by market inefficiency, often associated with the distortionary effects of taxes and subsidies.

Tax Revenue

The income that is gained by governments through taxation, used to fund public services and government obligations.

Excess Burden

The economic loss that society suffers due to market inefficiencies or taxes beyond the collected tax revenue.

Economic Decisions

Choices made by individuals, firms, or governments regarding the allocation of scarce resources to satisfy needs and desires.