The Alchian and Demsetz Theory of Why Business Firms Exist

question 242

Multiple Choice

The Alchian and Demsetz theory of why business firms exist suggests that

• A)there are only advantages to team production.
• B)disadvantages of team production may outweigh the disadvantages of individual production.
• C)individual production is more efficient than team production.
• D)the sum of team production is sometimes greater than the sum of individual production.

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Definitions:

Foreign Subsidiaries

Companies that are partially or wholly owned by a parent company but operate in a country different from where the parent company is headquartered.

Polycentric Attitude

An outlook or approach that values and respects the culture and practices of local people in foreign operations, contrasting with ethnocentric and geocentric attitudes.

International Operations

Business activities that are conducted across national borders, involving the management of production, marketing, and other functions in foreign locations.

Global Competitors

Companies that operate and compete in several countries, facing off against brands and products from different markets worldwide.