Question

Which of the following is a disadvantage of making (in-house manufacturing)?

a. the firm would incur both fixed and variable costs.
b. lower costs mean lower tax brackets leading to a shift in scale.
c. quality control is maximized on behalf of the buyer.
d. the firm has less control over quality.

Answer 1

One disadvantage of making (in-house manufacturing) is that d. the firm has less control over quality.

Step-by-step explanation:

A disadvantage of making (in-house manufacturing) is that the firm has less control over quality. When a company decides to manufacture its products in-house, it takes on the responsibility of ensuring that the products meet the desired quality standards. This can be challenging as the firm may lack the specialized expertise or resources to consistently maintain high quality. An example of this would be a company that manufactures electronics but does not have the necessary equipment or skilled technicians to properly test and inspect the products.