Marx's and Coase's Convergent and Divergent Views on the Firm

A small coastal nation is experiencing significant coral reef degradation. Scientific studies attribute this to three main causes: runoff of agricultural fertilizers from local farms, destructive fishing practices by the nation's commercial fishing fleet, and rising ocean temperatures. Which of the following statements provides the most accurate analysis of the governance required to address this issue?

Analyzing Contractual Relationships

Coordination Mechanisms in Business

According to Ronald Coase's view on the nature of the firm, the relationship between a manager and a subordinate is best characterized as a continuous series of market-based exchanges, where each directive is individually priced and negotiated.

Firm Coordination: In-House vs. Freelance

Match each economic relationship with the primary mechanism used to coordinate activities, based on the theory that firms are organized to minimize transaction costs.

A startup founder needs to create a marketing campaign. They can either contract with an external marketing agency for a fixed price to deliver a complete campaign, or they can hire a full-time marketing manager on a salary. From the perspective that firms are organized to supersede the price mechanism, which statement best describes the nature of the relationship with the full-time marketing manager?

According to the theory that firms exist to minimize the costs of using the market, the employment contract is an agreement where an employee accepts payment in exchange for following an entrepreneur's directives. This means that within the firm, the market's price mechanism is superseded by a system of ____.

A business owner needs a series of related tasks completed over the next year. According to the theory that firms exist to reduce the costs of using the market, arrange the following statements into a logical sequence that explains why the owner would choose to hire an employee rather than contracting for each task individually on the open market.

The Limits of Managerial Authority