Which of the Following Is Likely to Limit the Extent

question 165

Multiple Choice

Which of the following is likely to limit the extent of a firm's vertical integration?

• A)a managers' bounded rationality
• B)a small minimum efficient scale of producing inputs relative to the firm's input requirements
• C)the fact that the quality of inputs is easily determined at the time of purchase
• D)the presence of a large number of suppliers of the firm's inputs
• E)a high transaction cost of contracting with resource suppliers

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Definitions:

Indifference Curve

An economic graph representing combinations of goods that give a consumer equal satisfaction and utility.

Subjective Value

The individual and personal valuation of a good or service rather than its market value, based on personal preferences, needs, or satisfaction derived.

Equilibrium

A balance between market demand and supply that results in steady prices.

Budget Line

A budget line represents all combinations of goods and services that a consumer may purchase given current prices and income levels.