Which of the Following Statements Is True of Internal Transaction

question 33

Multiple Choice

Which of the following statements is true of internal transaction costs?

• A) Internal transaction costs arise when companies transact in the open market.
• B) When the internal costs involved in pursuing an activity in-house are more than the costs of transacting, then the concerned firm should vertically integrate.
• C) Internal transaction costs tend to increase with organizational size and complexity.
• D) It is beneficial to "buy" goods or services rather than "make" when internal transaction costs are low.

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Definitions:

Total Revenue

The total amount of money a firm receives from sales of its products or services, calculated by multiplying the price per unit by the number of units sold.

Total Cost

The overall amount of money spent by a company on the production, operation, and distribution of its goods and services.

Economic Profit

Profit calculated by subtracting both visible and hidden costs from total revenue, offering insight into the true financial gain of a business endeavor.

Marginal Revenue

The additional income received from selling one extra unit of a product or service.