Question

Social institutions such as firms, markets, property rights, and money _______.

1) give comparative advantage in all goods and services to advanced economies
2) are necessary to make decentralized coordination work
3) were collectively unknown until the 20th century
4) make decentralized coordination more complicated than it would be under central

Answer 1

Social institutions like markets and property rights are necessary for decentralized coordination in market economies, enabling efficient resource allocation and management of scarcity.

Step-by-step explanation:

The student's question involves understanding the role of social institutions such as firms, markets, property rights, and money in economies. These institutions are necessary to make decentralized coordination work efficiently in a market economy. By decentralizing decision-making to firms and individuals, the market can allocate resources more efficiently than a centrally planned economy could. It is essential to have these institutions to manage scarcity and enable individuals to engage in trade and specialization, thereby increasing productivity and living standards.