One Advantage of Team Production Over Contracting Out Is That

question 141

Multiple Choice

One advantage of team production over contracting out is that

• A) the cost of negotiating and enforcing contracts is generally lower with team production than with contracting out.
• B) the principal agent problem is eliminated by team production but cannot be addressed in contracting out.
• C) costs are always lower with team production because of the elimination of transactions costs.
• D) efficiency is always greater with team production.

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Definitions:

Pro Rata

A method of allocating an amount proportionally based on a share of some total, such as time or quantity.

Financially Sound

Describes a state in which an entity is stable, profitable, and has a strong balance sheet.

Correctable Problems

Issues or challenges within an organization that can be resolved or improved upon through appropriate measures.

Target Company

A company that is the subject of a merger or acquisition by another company, often referred to in the context of takeover bids.