Firms are more capable than markets at coordinating highly complex tasks, while markets are more capable of providing high-powered incentives for entrepreneurship.

Question

Quizplus · Accepted Answer

Firms and markets, as different institutional arrangements for organizing economic activity, have their own distinct advantages and disadvantages. The advantages of a firm include the ability to make command-and-control decisions and coordinate highly complex tasks, while the advantages of the market include high-powered incentives and increased flexibility.

Firms Are More Capable Than Markets at Coordinating Highly Complex