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FSOT Full Test Bank

Category - Economics

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What is it called when a company controls every portion of a product’s lifecycle, from raw materials to retail sale?

Vertical integration
Horizontal integration
Monopolistic activity
Economy of scale

Explanation

Answer: A - Vertical integration is when a company controls every portion of a product’s lifecycle. This has two advantages; value is created at each step so the company’s profits increase, and the company has opportunities to reduce costs by integrating its operations.

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