Which of the Following Is Least Likely to Provide a Motivation

question 101

Multiple Choice

Which of the following is least likely to provide a motivation for vertical integration?

• A) A continuous source of raw materials
• B) A desire to spread fixed costs across more output
• C) Access to an efficient distribution channel
• D) Acquisition of an established customer base

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Definitions:

Perfect Substitutes

Goods or services that can be used in exactly the same way and to the same extent, where one can completely replace the other in consumption.

Income Effect

The alteration in income for a person or the economy and the resulting influence on the demand for a certain good or service.

Substitution Effect

The economic principle indicating how consumers react to a change in price by substituting a more expensive item with a cheaper alternative.

Price

The total money demanded to secure a good or service.