Reading 16: Organizing Production LOS g习题精选 companies, div, efficient, activity

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LOS g: Explain why companies are often more efficient than markets in coordinating economic activity.

The production of a rock concert is an example of which type of organization of an economic activity?

A) Systemic coordination.

B) Market coordination.

C) Firm coordination.

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Market coordination occurs when a firm employs resources outside the firm more efficiently than if they relied only on internal resources.  An example is through the coordination of more than one market such as the production of a rock concert which involves many different markets (e.g., marketing, vending, musicians, security, facilities procurement, etc.).

 

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Which of the following statements least accurately describes why firms can coordinate economic activity more efficiently than markets? Firms can achieve:

A) economies of team production.

B) economies of scope.

C) diversification benefits.

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Firms can often coordinate economic activity more efficiently than markets because firms can reduce the costs of market transactions, and they can achieve economies of scale, scope, and team production.

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Two ways in which economic activity may be coordinated include:

A) market coordination and firm coordination.

B) market coordination and systemic coordination.

C) market coordination and structural coordination.

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Firm coordination occurs when a firm produces its product using resources within the firm. Market coordination occurs when resources outside the firm are used for example a firm may have other companies produce the components of their product (outsourcing) and the firm then assembles these outsourced components in-house.