Which of the Following Is NOT an Advantage of Firm

question 199

Multiple Choice

Which of the following is NOT an advantage of firm coordination of economic activity?

• A) Firm coordination decreases transactions costs.
• B) When firms coordinate economic activity, there are no opportunity costs.
• C) Firms can take advantage of the economies of team production.
• D) Economies of scope can be realized by firms that produce a range of goods and services that share specialized resources.

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Definitions:

Product-Variety Externality

External effects that occur when the introduction of new products benefits consumers more than the producers, typically by increasing the variety of goods available.

Business-Stealing Externality

Business-Stealing Externality occurs when a new entrant in a market captures a portion of the incumbent firm's customers, potentially leading to costs not accounted for in the entrant's decisions.

Spillover Benefits

These are benefits experienced by those who are not directly involved in economic transactions or activities; they result from the positive externalities of such transactions.

Advertising

The act of promoting products, services, or brands through various media channels to inform, persuade, and influence purchasing decisions.