Which of the following is the primary disadvantage of producing inputs within a firm?
A) Increases in transaction costs
B) Loss of specialization
C) Reductions in opportunism
D) Mitigation of hold-up problems

Question

Quizplus · Accepted Answer

The primary disadvantage of producing inputs within a firm is the loss of specialization. When a firm produces inputs in-house, it may have to divert resources and attention away from its core competencies, resulting in reduced efficiency and increased costs. Outsourcing inputs allows a firm to benefit from the expertise and specialization of external suppliers in those specific areas. The other options (increases in transaction costs, reductions in opportunism, and mitigation of hold-up problems) are potential advantages of in-house production.

Which of the Following Is the Primary Disadvantage of Producing