Microeconomics (Book Only)
12th Edition
ISBN: 9781285738307
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 8, Problem 1VQP
To determine
The Alchian–Demsetz theory of firm.
Expert Solution & Answer
Explanation of Solution
This theory was developed by the economists Armen Alchian and Harold Demsetz. They suggest that a firm is formed by a group of people who are working together. The productivity of this group of people is more than that of an individual’s production. One of the important problems associated with this group work is that the tendency to reduce the agreed effort by the participants, while the accurate intervention of the monitor or the manager reduces this problem to an extent. That is, the monitor rewards efficient workers and punishes idlers. This would help the monitor to preserve the team’s benefits and reduce the monitor’s incentive to shirk.
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Explain how Coca-Cola, Inc. takes advantage of economies of scope.
Farley's Frozen Yogurt is a purely competitive firm that sells frozen yogurt cakes. The market price is $12 per cake. Assume that AVC is $8 per cake, AFC is $6 per cake, and Farley's sells 250 frozen yogurt cakes.
a. Farley's Frozen Yogurt
Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box.
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should shut down.
should produce in the short run.
will have a short-run loss.
will have a normal profit.
will have an economic profit.
Based on the following graph, identify the market structure the firm is operating in.
Chapter 8 Solutions
Microeconomics (Book Only)
Ch. 8.2 - Prob. 1STCh. 8.2 - Prob. 2STCh. 8.2 - Prob. 3STCh. 8.2 - Prob. 4STCh. 8.3 - Prob. 1STCh. 8.3 - Prob. 2STCh. 8.3 - Prob. 3STCh. 8.4 - Prob. 1STCh. 8.4 - Prob. 2STCh. 8.4 - Prob. 3ST
Ch. 8.4 - Prob. 4STCh. 8.5 - Prob. 1STCh. 8.5 - Prob. 2STCh. 8.5 - Prob. 3STCh. 8 - Prob. 1VQPCh. 8 - Prob. 2VQPCh. 8 - Prob. 3VQPCh. 8 - Prob. 4VQPCh. 8 - Prob. 5VQPCh. 8 - Prob. 1QPCh. 8 - Prob. 2QPCh. 8 - Prob. 3QPCh. 8 - Prob. 4QPCh. 8 - Prob. 5QPCh. 8 - Prob. 6QPCh. 8 - Prob. 7QPCh. 8 - Prob. 8QPCh. 8 - Prob. 9QPCh. 8 - Prob. 10QPCh. 8 - Prob. 11QPCh. 8 - Prob. 12QPCh. 8 - Prob. 13QPCh. 8 - Prob. 14QPCh. 8 - Prob. 15QPCh. 8 - Prob. 16QPCh. 8 - Prob. 17QPCh. 8 - Prob. 18QPCh. 8 - Prob. 19QPCh. 8 - Prob. 1WNGCh. 8 - Prob. 2WNGCh. 8 - Prob. 3WNGCh. 8 - Prob. 4WNGCh. 8 - Prob. 5WNGCh. 8 - Prob. 6WNGCh. 8 - Prob. 7WNG
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Explain how economies of scale keep new firms from entering an industry in which firms are earning economic profits.arrow_forwardExplain why a perfectly competitive firm would or would not advertise.arrow_forwardMany firms, especially in perfectly competitive markets, file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?arrow_forward
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