The Opportunity Cost of Making a Component Part in a Factory

question 72

Multiple Choice

The opportunity cost of making a component part in a factory with no excess capacity is the:

• A)variable manufacturing cost of the component.
• B)fixed manufacturing cost of the component.
• C)total manufacturing cost of the component.
• D)net benefit foregone from the best alternative use of the capacity required.

---

Definitions:

Horizontal Merger

A type of business consolidation that occurs between companies operating in the same industry, often to reduce competition or achieve economies of scale.

Vertical Merger

A merger between two companies that operate at different levels within the same industry's supply chain.

Innovative Products

Products that introduce new features, functions, or designs that differ significantly from previous products and may offer new benefits to the consumer.

Larger Firms

Companies or enterprises that are significant in size, often having a large number of employees, operations, and market influence compared to smaller businesses.