What is coordination mechanism? Give an example. It is method of coordinating pe

Question

What is coordination mechanism? Give an example. It is method of coordinating people's wants with other people's desires. All markets are a type of coordination mechanism. It is a method of coordinating people's wants with other people's desires. Only markets with money and prices have a coordination mechanism. Markets without money and prices cannot match wants and desires. It is method of helping people overcome their predictable irrationalities by mapping their preferences with all possible outcomes. Most coordination mechanisms are a matter of information It is a method of deciding how to best coordinate worker abilities within a firm. Because firm works by command and control not markets, it must have a coordination mechanism.

Explanation / Answer

Option A is correct

In an economy, due to limited resources and unlimited wants and desires, everyone’s needs and desires cannot be fulfilled. Therefore, there should be a coordination between one’s wants and other’s desires. In general, all markets are a type of coordination mechanism. In fact, markets have a self-coordinating mechanism due to demand and supply forces. For example, all the students are not assigned the same courses what they actually desired for. Sometimes, they are assigned a different course.

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