If the Quality of an Input Is Easily Determined at the Time

question 151

Multiple Choice

If the quality of an input is easily determined at the time of purchase, then it is likely to

• A)be the cause of high transaction costs of using markets
• B)encourage vertical integration of a firm
• C)encourage supplier firms to produce low-quality inputs
• D)be produced internally by the firm
• E)be purchased in the market

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Definitions:

Accommodation

In psychology, the process of adapting cognitive schemas in response to new information.

Existing Schemes

Preexisting cognitive structures or frameworks in the mind that help individuals organize and interpret information.

Modify

To change or alter something, often to improve it or to adapt it to different conditions.

Cognitive Development

The process of growth and change in intellectual capabilities such as thinking, reasoning, and understanding.