Imagine what would happen to your consumption if you couldn’t trade and had to be self-sufficient. How would self-sufficiency impact your level of consumption of food? Clothing? Transportation? Communications? Entertainment? Health care? Education? Try to give an example.

Adrawback of short-term contracting as an alternative to making a component in-house is thata. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. b. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. c. it fails to allow a long planning period that individual market transactions provide. d. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.