A firm chooses the institution to purchase inputs:
A) which minimizes the transactions costs of obtaining inputs.
B) in order to create more divisions.
C) which minimizes worker shirking.
D) to implement profit sharing.

Question

Quizplus · Accepted Answer

The firm should choose the institution that minimizes the transactions costs of obtaining inputs. This will help the firm to reduce its costs and increase its profits. The other options, such as creating more divisions, minimizing worker shirking, and implementing profit-sharing, may be important considerations, but they are not as critical as minimizing transactions costs.

A Firm Chooses the Institution to Purchase Inputs