If a firm requires a standardized raw material to produce its output,______ is often the least expensive option to purchase the raw materials.
A)divestiture
B)the spot market
C)backward integration
D)forward integration

Question

Quizplus · Accepted Answer

The spot market is often the least expensive option to purchase standardized raw materials as it allows firms to purchase the necessary inputs at the current market price without needing to commit to long-term contracts or backward/forward integration. This can be beneficial in situations where there is excess supply in the market or when the demand for the raw material is low.

If a Firm Requires a Standardized Raw Material to Produce