A car producer considers whether to buy the motor for its car from a supplier or to produce it. Which of the above is a transaction cost of buying from the supplier? a. The price of the motor. b. Writing contracts which handle effectivelly moral hazard and adverse selection issues. c. The cost of assembling the car. d. The cost of transporting the motor to the firm's factory. All of the above.
A car producer considers whether to buy the motor for its car from a supplier or to produce it. Which of the above is a transaction cost of buying from the supplier? a. The price of the motor. b. Writing contracts which handle effectivelly moral hazard and adverse selection issues. c. The cost of assembling the car. d. The cost of transporting the motor to the firm's factory. All of the above.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A car producer considers whether to buy the motor for its car from a supplier or to produce it. Which of the above is a transaction cost of buying from the supplier?
a. The price of the motor.
b. Writing contracts which handle effectivelly moral hazard and adverse selection issues.
c. The cost of assembling the car.
d. The cost of transporting the motor to the firm's factory.
All of the above.
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