In Which of the Following Instances Does Decentralization of Production

question 54

Multiple Choice

In which of the following instances does decentralization of production make most sense?

• A)The product serves universal needs.
• B)The production technology has low fixed costs and low minimum efficient scale,and flexible manufacturing technology is not available.
• C)Important exchange rates are expected to remain relatively stable.
• D)Differences between countries in factor costs have a substantial impact on the costs of manufacturing in various countries.

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Definitions:

Quality Competition

The competition among businesses to offer products or services of higher quality, often instead of competing on price.

Product Differentiation

Refers to the process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Market Power

The ability of a firm to influence or control the price and output levels in a market.

Perfect Competition

A market structure characterized by a large number of small firms, a homogenous product, free entry and exit, and perfect information, leading to prices equaling marginal costs.