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Jesse started a successful telecommunications company that provided voicemail services to business clients in the Midwest. As the business grew, Jesse added functional departments including a marketing department and an accounting department. After a few years, he realized that employees who specialized in these areas no longer shared knowledge with each other in the same way they did when the operation was smaller. As one of Jesse's business consultants, you explain that as the company grows taller, it cannot avoid this pitfall, and he should focus on continued functional departmentalization, especially if he supports innovation and learning.
Edgeworth Box
A diagram used in microeconomics to show the distribution of resources or goods between two parties and to illustrate potential gains from trade.
Pareto Efficient
A Pareto efficient outcome is one in which it is impossible to make any one individual better off without making at least one individual worse off, indicating an optimal allocation of resources.
Utility Function
A mathematical representation of how a consumer's preferences between different goods or services translate into levels of satisfaction or utility.
Initial Endowment
Refers to the initial allocation of goods, resources, or wealth that an individual or entity possesses before any transactions.
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