According to economists Alchian and Demsetz, firms are formed when

A. the sum of what individuals can produce as a team is greater than the sum of what individuals can produce working alone.
B. the sum of what individuals can produce working alone is greater than the sum of what individuals can produce as a team.
C. what each individual can produce as a member of a team is less than what each individual can produce working alone.
D. the sum of what individuals can produce as a team is equal to the sum of what individuals can produce working alone.
E. none of the above

A

Explanation:This question is self explanatory,Alchian and Demsetz are of the options that firms involves a group of people coming to produce goods which brings about greater output than that of individuals .Their focus was mainly on team production in analysing the theory of firms rather than output per individual

A) the sum of what individuals can produce as a team is greater than the sum of what individuals can produce working alone.

Explanation:

Alchain and Demsetz studied organizations as a cooperative and specialized union resulting from an increase in productivity and lower costs, in other words organizations are the result of synergy. They argued that in order for synergy to result, team work must be combined in an organized  manner so that positive cooperation results.

Their theory applies to both individual and companies that merge together.

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to