When the output of some units in a firm can be used as inputs to other units,synergies develop,which can lower costs and generate profits.

Question

Quizplus · Accepted Answer

This statement is true. When one unit's output can be used as input for another unit, the synergies that develop can lead to cost savings and increased profits for the firm. This is called vertical integration, where the firm owns and operates multiple stages of the production process, enabling it to control costs and quality more effectively.

When the Output of Some Units in a Firm Can