Lime's business decision to buy scooters that are not optimized for its purposes because the option to manufacture their own scooters would result in large fixed costs. Which of the following disadvantages of vertical integration does this represent?
A) Increasing cost structure
B) Technological change
C) Demand unpredictability
D) Mismatches in optimal scale
E) Vertical disintegration

Question

Quizplus · Accepted Answer

This represents a mismatch in optimal scale, as Lime is choosing to purchase scooters that are not optimized for its specific purposes instead of manufacturing their own, which would require a large initial investment in fixed costs.

Lime's Business Decision to Buy Scooters That Are Not Optimized