The ability of a firm to pass on cost increases to its customers or revenue decreases to its suppliers is known as:
A)a natural hedge.
B)vertical integration.
C)adverse selection.
D)operating insurance.
E)supply management.

Question

Quizplus · Accepted Answer

This ability is known as a natural hedge, where the firm is able to offset its own risks by transferring them to other parties in the supply chain. It helps the firm to reduce its exposure to external factors such as fluctuations in commodity prices or changes in customer demand.

The Ability of a Firm to Pass on Cost Increases