Firms Use All of the Following for Reducing Their Exposure

question 23

Multiple Choice

Firms use all of the following for reducing their exposure to commodity price movements EXCEPT ________.

• A) horizontal integration
• B) vertical integration
• C) long-term storage of inventory
• D) futures contracts

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Definitions:

Price Ceiling

A legal maximum price that can be charged for a particular good or service to prevent prices from becoming too high.

Implicit Tax

A non-legislative effect that decreases the benefits of certain financial choices because of opportunity costs or market adjustments.

Market Equilibrium

The price at which quantity supplied equals quantity demanded.

Organ Sales

The controversial practice of selling human organs for transplantation, often criticized for ethical, legal, and health concerns.