Economics

As explained in our BSZ textbook, we can think of the firm as the locus of a set of contracts. Below, I have posted a diagram from the text that highlights some of those contracts. Note that some of these contracts are quite explicit, detailed, and formal, whereas others are implicit and based on a shared general understanding rather than on a formal legal agreement.

In this context, your task is to write an essay outlining which of the contracts identified in the diagram you see as the most important, in the sense that they need to be formal and carefully written, and which of these you see as the least important, in the sense that they are simply based on generally acceptable shared expectations, from the firm’s perspective. As part of your answer make sure to explain carefully whether or not, and if and why, you believe some of the contracts identified in the text require more attention than others.

Note that you are free to use any and all resources at your command in writing your answer, with the caveat that everything you write must be in your own words, all direct quotes must be properly identified