If an Important Component of a Firm's Production Process Is

question 21

Multiple Choice

If an important component of a firm's production process is difficult to specify in a contract and even more difficult to enforce in its production standards,then it probably makes sense to:

• A)buy the component in the open market.
• B)use a simple short-term contract.
• C)vertically integrate upstream to build the component.
• D)incur information cost.

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Definitions:

Supremacy Clause

The Supremacy Clause is a provision in Article VI of the U.S. Constitution establishing that federal law takes precedence over state laws and constitutions when they are in conflict.

Constitution

The fundamental law of a nation or state, outlining the principles and organization of its government. In the U.S. context, it refers to the supreme law of the United States.

Private Property

The legal designation for ownership of property by non-governmental legal entities, individuals, or corporations.

First Amendment

Part of the United States Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition the government.