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.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter2: Economic Systems And The American Economy

Section2.2: Characteristics Of The American Economy

Problem 2R

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Question

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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