Why is it widely accepted that the government is responsible for dealing with externalities?
Answer to relevant QuestionsGive an example of an externality between firms, between customers and firm, and between suppliers and firm? What is adverse selection? What is moral hazard? Give an example of these two problems arising between a firm and its suppliers. What are the “boundaries” of a firm? What determines the extent of vertical boundaries – vertical integration? What determine the extent of horizontal integration – scope? Use a cost benefit analysis to describe the ...Suppose that an employee has two tasks to perform—assembling machinery and evaluating quality. Suppose that the supervisor can only observe how many machines have been assembled by the worker. Is a hierarchical firm ...Here is a view on organizational changes.
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