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Arm & Hammer Is Expanding Its Product Line When It

question 99

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Arm & Hammer is expanding its product line when it branches out from baking soda into laundry detergent and toothpaste.

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Definitions:

Coase Theorem

An economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.

External Costs

Costs generated by a production or consumption activity that are not borne by the producer or consumer but by society at large.

Transaction Costs

Costs associated with the process of buying and selling, including search and information costs, bargaining costs, and enforcement costs.

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