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Describe the Application of economic theories
Pertinent business decisions necessitate an unambiguous understanding of the environmental and technical conditions under which business decisions are taken. Application of economic theories to explain as well as analyse business environment andtechnical conditions, contributes greatly to rational decision-making process. Economic theories have many pronged applications in the analysis of practical problems of business. Keeping in mind the escalating complexity of business environment, efficacy of economic theory as a tool of analysis and its contribution to process of decision-making has been extensively recognised
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Explain baumol''s static model
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For Oliver E. Williamson, existence of firms derives from 'asset specificity' in production, where assets are specific to each other such that their value is much less in a second-
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