A business manager has to decide whether to buy supplies from the marketplace or whether to build them inside the company. What do "information" and "contracting" have to do with this decision?
What will be an ideal response?
Contracting costs and the costs of acquiring specific knowledge or specific information play a large role in the decision of whether transactions occur in the marketplace or within the boundaries of the firm. Firms are more efficient than markets at organizing some transactions when the costs of information gathering and contracting in markets are high. However, when information is available at a lower cost and contracting or transactional costs are low in the marketplace, it is more efficient for transactions to occur in the marketplace. Individuals have a strong incentive to organize transactions efficiently to maximize gains from trade.
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In the equation, GDP = C + I + G + X - M, G refers to
A) federal government expenditures plus all transfer payments. B) local, state, and federal government spending for all purposes. C) the taxes and expenditures of all government units. D) local, state, and federal government expenditure on goods and services, but does not include transfer payments.
If the quantity of labor Sam supplies to a job is zero over the realistic range of wages, Sam
a. is either unwilling or unable to perform the job b. has not been hired to do the job c. has not been hired to do the job at the going market wage rate d. is unable to perform the job e. is unwilling to perform the job