A potato chip manufacturer purchases a potato farm. Which of the following regarding its strategy is true?
A. The manufacturer has effectively used vertical integration to increase its bargaining position and reduce transaction costs.
B. The manufacturer has enhanced utilization by allowing depreciation and other fixed costs to be spread over a larger unit volume.
C. The manufacturer has sacrificed quality by using a lower-cost input.
D. The manufacturer has efficiently capitalized on the experience and learning-curve effects within the company.
E. The manufacturer has effectively reduced its operating costs by outsourcing its activities.
Answer: A
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