In Exhibit 141, suppose each tire produced requires ten pounds of rubber.Which of the following is true?

Question

In Exhibit 14­1, suppose each tire produced requires ten pounds of rubber.Which of the following is true?

Quizplus · Accepted Answer

Given that each tire requires ten pounds of rubber, producing 200,000 tires would require two million pounds of rubber. However, it does not necessarily mean that the tire manufacturer should integrate backward into producing rubber, as it may not be their core competency and could result in inefficiencies. Instead, it would be more efficient for the tire manufacturer to buy rubber from a specialized rubber producer, who may benefit from economies of scale and expertise in producing rubber. Therefore, the tire manufacturer should buy rubber rather than produce it. The given information does not provide enough evidence to support options D and E.

In Exhibit 14­1, Suppose Each Tire Produced Requires Ten Pounds

In Exhibit 141, Suppose Each Tire Produced Requires Ten Pounds