That some firms are engaged in more than one type of business is explained, in some cases, by
A)moral injunctions such as the Golden Rule.
B)the existence of charitable organizations.
C)government regulations that discourage the internalization of externalities.
D)the fact that the internalization of externalities sometimes coincides with the self-interest of the relevant parties.

Question

Quizplus · Accepted Answer

The fact that the internalization of externalities sometimes coincides with the self-interest of the relevant parties is a more plausible explanation than moral injunctions, charitable organizations, or government regulations. This is because when firms engage in multiple types of business, they can benefit from synergies and economies of scope, which can lead to greater profitability and a competitive advantage. By internalizing externalities, firms can reduce costs and risks, and enhance their reputation and brand value, which can ultimately increase their market power and resilience. Therefore, it is rational for firms to pursue multiple lines of business if they can leverage their core competencies and manage their externalities effectively.

That Some Firms Are Engaged in More Than One Type