Which economic concept is illustrated when the finished product of one company becomes the raw material for another company?

• A. Scarcity
• B. Interdependence
• C. Opportunity cost
• D. Consumer sovereignty

Answer: (B)

Verified step by step guidance

1. Understand the key terms given in the options: Scarcity refers to limited resources; Opportunity cost is the value of the next best alternative foregone; Consumer sovereignty means consumers determine what goods are produced.
2. Focus on the description in the problem: a finished product from one company is used as a raw material by another company, indicating a relationship between firms in production.
3. Recognize that this relationship shows how companies rely on each other to produce goods, which is the essence of Interdependence in economics.
4. Interdependence means that economic agents (like companies) depend on each other to obtain inputs or sell outputs, forming a network of economic activity.
5. Therefore, the concept illustrated by the problem is Interdependence, as it highlights the mutual reliance between companies in the production process.