One of the reasons that a firm can be ________ efficient than a market is that the firm ________.
A) more; does not have any economies of scale
B) more; lowers transactions costs
C) less; has economies of scope
D) less; produces lower profits

Question

Quizplus · Accepted Answer

The firm can be more efficient than a market because it can lower transactions costs. Transactions costs are the costs of doing business, such as the costs of finding and negotiating with buyers and sellers, and the costs of enforcing contracts. By lowering transactions costs, the firm can make it more efficient to produce and sell goods and services.

One of the Reasons That a Firm Can Be ________