1. When the costs of pursuing an activity in-house are less than the costs of transacting for an activity in the market, which one of the following is recommended?

a. Keep the activity in-house

b. Go to the market to transact for the activity

2. Which one of these is a common risk of vertical integration?

a. Inability to invest in specialized assets

b. Reduced flexibility in switching to new technologies

3. When an equipment manufacturer decides to vertically integrate into manufacturing key components that it uses in its equipment, the strategy is called:

a. Backward Vertical Integration

b. Forward Vertical Integration

4. Where is "component manufacturing" positioned with respect to "equipment assembly" in a value chain?

a. Upstream Industry

b. Downstream Industry