As Transaction Costs Decrease,firm Size (The Number of Employees)should Shrink

question 36

True/False

As transaction costs decrease,firm size (the number of employees)should shrink because it becomes easier and cheaper for the firm to contract for the purchase of goods and services in the marketplace rather than to make the product or offer the service itself.

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Definitions:

Codification

The process of collecting and restating the law of a jurisdiction in certain areas, usually by subject, forming a legal code.

Corporation Law

The body of laws, rules, and regulations that govern the formation, operation, and dissolution of corporations.

Limited Partner

An investor in a partnership who has limited liability to the extent of their investment in the partnership and does not participate in day-to-day management.

Bankruptcy Loss

Financial losses incurred due to the declaration of bankruptcy, affecting creditors, investors, and the bankrupt entity itself.