Question

Use the market relates to vertically integrate as: Select one: a. "Make" relates to "buy". b....

Use the market relates to vertically integrate as:

Select one:

a. "Make" relates to "buy".

b. "Transaction costs" relates to "agency" and "influence costs".

c. "Buy" relates to "make".

d. "Upstream" relates to "downstream".

e. Both b and c are correct.

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Answer #1

Answer : (e) Both b and c are correct.

Vertical integration is the arrangement where the company owns it's supply chain. Supply chain includes a system of organizations, people, activities, information and resources that are involved in providing a final product or services to the consumer. Here, raw materials gets transformed into finished goods and reach the consumers. Hence vertically integration leads to produce a good to sell in the market.

Agency costs and influence costs are internal costs gets included in the final transaction cost. And making a product leads to buying a product in the market.

Hence but relates to make and transaction costs relates to agency and influence costs.

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