In the Theory of the Firm (As Put Forth by Alchian

question 218

Multiple Choice

In the theory of the firm (as put forth by Alchian and Demsetz) , trade or exchange pops up in the following situation:

• A)when individuals choose to form a team.
• B)when the monitor fires an employee.
• C)when individuals in a team shirk.
• D)when the government forbids employees from joining unions.

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Definitions:

Tolerance for Ambiguity

The ability of an individual to remain comfortable and continue to function effectively in situations that are uncertain, unknown, or unclear.

Internal Locus

A psychological attitude where an individual believes that they can control their life and outcomes rather than external forces.

Creativity

The ability to produce original and valuable ideas or solutions.

Debt Financing

Borrowed funds that entrepreneurs must repay.