Production Through the Firm Is Often More Efficient Than Market

question 130

Multiple Choice

Production through the firm is often more efficient than market exchange when

• A)production requires many transactions among many resource owners
• B)production requires few transactions between two resource owners
• C)the cost of transacting business through market relations is less than the cost of undertaking the same activity within the firm
• D)inputs are easily identified, measured, priced, and hired
• E)the costs of determining inputs and negotiating contracts are low

---

Definitions:

Marginal Utility

The additional contentment a customer derives by consuming one more unit of a product or service.

Demand

The desire and ability of consumers to purchase goods and services at various price levels.

Budget Line

A budget line represents the combination of goods and services that a consumer can purchase given their income and the prices of those goods and services.

Consumer's Equilibrium

A state where an individual allocates their income in a way that maximizes their satisfaction or utility, given their budget.