When Transactions Costs Are High or Free-Rider Problems Exist, a Private

question 101

True/False

When transactions costs are high or free-rider problems exist, a private remedy for an externality may be feasible.

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Definitions:

Make-to-order

A production strategy where goods are only manufactured after receiving a customer's order, allowing for customization.

Make-to-stock

A production strategy where items are produced in large quantities and stockpiled for sale in anticipation of customer demand.

Procurement

The process of obtaining goods and services, including all activities from the identification of needs through to the receipt and approval of items.

Production

The process of creating goods and services from various resources.