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:

Predictive Validity

The degree to which a result from a measurement or evaluation forecasts upcoming abilities in a connected activity.

Test Validity

The degree of accuracy with which an assessment measures its intended target.

Normal Distribution

A bell-shaped frequency distribution curve where most occurrences take place in the middle of the range and the probabilities of values farther away from the mean taper off equally in both directions.

Predictive Validity

How well a score from a test or scale indicates anticipated performance in tasks or outcomes that are related.