A Farmer Realizes That He Is Not Getting Fair Price

question 5

Multiple Choice

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets. As such, he decides to sell produce directly to the local market. This is an example of:

• A) forward horizontal integration
• B) backward vertical integration
• C) horizontal diversification
• D) backward horizontal integration
• E) forward vertical integration

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Definitions:

Short-Run Losses

Financial deficits experienced by a business or project within a brief period, often due to initial start-up costs or market fluctuations.

Average Variable Costs

Costs that vary with output level, calculated by dividing total variable costs by the quantity of output produced.

Operate

To function or work in a particular manner, often referring to businesses and machinery performing their intended duties.

Diseconomies of Scale

The phenomenon where production costs per unit increase as the scale of operation expands.