The Transaction Cost Approach Implies That an Organization Should

question 33

Multiple Choice

The transaction cost approach implies that an organization should:

• A) select a mechanistic structure to reduce costs.
• B) change its domain to decrease transaction costs.
• C) minimize dependence on others for scarce resources.
• D) use relatively informal linkage mechanisms to avoid bureaucratic costs.

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Definitions:

Substitute Goods

Products or services that can be used in place of each other. When the price of one falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.

Consumer Behavior

The analysis of how consumers' preferences and economic decisions affect the demand for goods and services.

Marginal Utility

The change in total utility a person derives from consuming an additional unit of a good or service.

Total Utility

The overall satisfaction or benefit a person receives from consuming a certain amount of goods or services.