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Question: how might the existence of substantial transactions costs lead firms...

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How might the existence of substantial transactions costs lead firms to merge with one another?

What affect do transactions costs have on collective efforts (like community organizing) to remedy negative externalities?

Using Maslow’s hierarchy of needs, explain why increases in per capita income above a certain level fail to result in improved well-being or happiness (see pages 86 and 87 in Friedman).

Using the Baumol Effect, explain why services like education and health care are getting more expensive compared to manufactured goods.

What is meant by caring labor and why is it important in a market economy?

Why does a market economy produce too much of commodities whose production results in external diseconomies?

Explain why private, for-profit firms will not provide public goods.

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