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Department
Economics for Management Studies
Course
MGEC40H3
Professor
Majid Aramand
Semester
N/A

Description
#1- what is a firm? economic system that works by itself. price as the main control mechanism and the entrepreneur that coordinates the firms activities contracts- used to control the firms boundaries why does a firm emerge? to gain profit be own master why does a firm get larger 1) gain monopoly 2) economies of scale 3) lower price of supply prices 4) entrepreneur is less likely to make mistakes 5) small costs to organize transactions #2)neoclassical theory --> organizes firm to profit maximizing easy to compute mathematically. can observe exogenous changes eg implementing taxes or a change in wages principle agency theory--> recognizes that there will be goal conflicts between employees and the firm transaction costs theory --> everything a firm does planning, searching coordinating there is a costs -if it is less costly to conduct a transaction in the firm as opposed to the market the firm will do it nexus of contracts --> every business organisation assumes to be a standardised series of contracts eg corporation property rights theory --> ownership of assets = residual rights to control the assets #3- joint productivity yields more than a su
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