Economic interaction occurs in firms as opposed to markets
A)because markets are too competitive.
B)because this is what the government wants.
C)in order to lower transaction costs.
D)in order to increase transaction costs.
E)if workers want to increase wages but not product prices.

Question

Quizplus · Accepted Answer

Firms exist to lower transaction costs, such as the costs of searching for a trading partner, negotiating prices, and enforcing contracts. By internalizing economic activity within the firm, these transaction costs can be reduced, compared to interacting in a market.

Economic Interaction Occurs in Firms as Opposed to Markets