The Criminal Records Corporation is operating at its minimum efficient scale, selling 10,000 records per month via late-night cable TV advertising. It currently buys pressed records from Hole-in-the-Middle, Inc, which has a minimum efficient scale of 100,000 records per month. Which of the following should Criminal Records do?

Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the larger business.a.
b. Buy 100,000 records from Hole-in-the-Middle, so that company can reach its minimum efficient scale too.
c. Buy Hole-in-the-Middle and use its facilities to manufacture the 10,000 records it needs.
d. Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the more efficient business.
e.  Continue to buy 10,000 records from Hole-in-the-Middle, which can make the records more cheaply.

ANSWER:

e.  Continue to buy 10,000 records from Hole-in-the-Middle, which can make the records more cheaply.