Production Through the Firm Is Often More Efficient Than Market

question 130

Multiple Choice

Production through the firm is often more efficient than market exchange when

• A)production requires many transactions among many resource owners
• B)production requires few transactions between two resource owners
• C)the cost of transacting business through market relations is less than the cost of undertaking the same activity within the firm
• D)inputs are easily identified, measured, priced, and hired
• E)the costs of determining inputs and negotiating contracts are low

---

Definitions:

Optimum

The most favorable condition or level for growth, reproduction, or success.

Substitutes

Two goods for which an increase in the price of one leads to an increase in the demand for the other.

Complements

Two goods for which an increase in the price of one leads to a decrease in the demand for the other.

Budget Constraints

A representation of the trade-offs between different goods and services that a consumer can afford with their limited income.