BUS 374 Final: BUS 374 reading notes - all articles

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 374
• Professor: Rajiv Kozhikode

Document Summary

Traditional understanding of the economic system it works itself (demand and supply balance: assumes direction of resources is dependent directly on the market (price mechanism, does not work within a firm, must be directed by individuals. The distinguishing mark of a firm is the supersession of the price mechanism. Resource allocation in the market vs. in the firm: economists say the market coordinates allocation but also recognize that directors within a firm have coordination powers too. Costs of using the market: figuring out what the relevant prices are, transaction costs, reduced when you have a firm. A firm may be obtained when the direction of resources becomes dependent on the buyer. The operation of a market costs something and by forming an org and allowing some authoritative figure to direct the resources, certain marketing costs are saved. Exchange transactions on the market and ones within a firm are treated differently by the government.