When is disclosure economically ...

[sabina]

When is disclosure economically desirable?

Question 2

The scope of a firm refers to its
 A) vertical boundaries.
  B) economies of scale.
  C) horizontal boundaries.
  D) all of these choices.

[djofnc]

Answer to Question 1

A contract can contain information that is valuable to both the signing parties and outsiders. Sometimes the law requires that certain facts be disclosed in it. Disclosure is economically desirable where a failure to disclose would reduce the economic value the agreement can produce. As an example, if you put a house on the market you must generally inform potential buyers that it has structural defects or is infested by termites. A buyer with this information is in a better position to determine its suitability than one without it.

Answer to Question 2

C

[sabina]

Excellent

[recede]

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