3. The neoclassical theory of the firm suggests that firms produce outputs by combining inputs that were produced in a market from other individuals and firms. They do this because some other firm will have a comparative advantage in producing the input they use. Yet, firms produce some of their own inputs. Explain Ronald Coase's theory for why firms do this.

3. The neoclassical theory of the firm suggests that firms produce outputs by combining inputs that were produced in a market from other individuals and firms. They do this because some other firm will have a comparative advantage in producing the input they use. Yet, firms produce some of their own inputs. Explain Ronald Coase's theory for why firms do this.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 9RQ: A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals...

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