Answer the following statements true (T) or false (F)

1) Vertical integration can increase and decrease a firm's costs.
2) If all stages of production occur within a vertically integrated firm, the firm has no taxable transactions during production.
3) Costs incurred in imposing compliance with a contract between an upstream firm and a downstream firm are considered to be monitoring costs.
4) If an upstream firm and a downstream firm have a long-term contract regarding the price of an input, a change in the market price of the input can result in either the upstream or downstream firm to incur an opportunity cost.
5) If the vertical integration between two firms creates greater managerial diseconomies than cost savings, the merger will increase the combined firm's overall costs.


1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) TRUE

Economics

You might also like to view...

If competition can be relied upon to serve as the regulator of a market, but if the game needs to be kept fair, the proper governmental policy should be

a. nationalization b. economic regulation c. the application of antitrust d. socialization e. government ownership

Economics

Describe the three pillars of productivity growth

Economics

If the price of an asset is rising rapidly due to unrealistic expectations about further price growth, then an investor who purchases the asset will ________ a great deal of money.

A. always make B. never make C. always lose D. sometimes make

Economics

In the above table, the cross price elasticity of demand (using averages) for C with good A, when PA increases from $12 to $15, is approximately equal to

A. +1.03 B. +0.44. C. -0.44. D. +2.26.

Economics