Chapter 4—Spontaneous Order and the Firm Key
1. The Prime Directive says look to
2. Risk is shifted to the owners of a firm. In return they receive
3. Firms would not exist if
4. If firms were teams then there would be a problem of
5. If firms were teams, then there is a need for a
6. Firms exist because of
7. Firms cannot resemble
8. If a firm is wondering whether or not it should “buy or make,”
9. The way one firm relates to another in the supply chain is referred to as being
10. If a firm decides to produce a product that it once purchased from a firm upstream it has made a
11. Assume that deciding to do internally something that was once purchased from a company upstream offers a
10 percent return. What is the cost of this decision?
12. It is sometime useful to view each step in the supply chain as a(n)
14. All the costs of a transaction are referred to as
15. Without contracts, what type of transactions would occur?
16. Without enforcement, a contract
17. The CEO and stockholders are not necessarily the same people. This gives rise to
18. The market for control of corporations serves to
19. The scope of a firm refers to its
20. Firm governance must enhance
21. Stockholders have little incentive to monitor
22. Firms serve similar functions to
23. Managers can be seen as monitoring ____ within the firm.
24. For diversification to be a successful management strategy, it must
25. Property rights to resource uses are assigned to owners of the firm to avoid
26. Organizational structure can be a strategic asset if it
27. Firms exist because of the low cost associated with creating complete contracts
28. Make or buy decisions affect the degree of vertical integration.
29. Upstream and downstream refer to the degree of horizontal integration.
30. The structure of an organization is influenced by transactions costs.
31. Teams have an incentive problem called free-riding.
32. Owners claim residual income.
33. A self-managed team is still headed by a boss.
34. Firms can be governed like democracies are governed.
35. A narrowly diversified firm has wide economies of scope.
36. Supply chain is the entire vertical process of a firm.
37. The CEO and stockholders talk almost everyday.
38. Principal-agent problems are not addressed in the market for corporate control.
39. The structure of a firm can fail in similar ways to market failure.
40. Managers can often been seen as solving property right problems.
41. Governance of a firm is not related to transparency issues.