Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: The market-price mechanism is more effective than organized firms at managing the high expenses of continuous labor recruitment and daily fluctuations in supplier prices. Reason R: Firms exist as structured alternatives to the market-price mechanism to provide stability and minimize transaction costs by establishing long-term contracts with staff and suppliers. In the light of the above statements, choose the most appropriate answer from the options given below:

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Economics · Theory of the Firm

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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A is not correct but R is correct

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Answer 1

Both A and R are correct and R is the correct explanation of A

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