Transaction costs reduce the benefit accruing to the parties involved in an exchange. Explain why
Transaction costs reduce benefits to the two parties because a part of the economic value goes into funding the transaction cost.
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Explain how scarce jobs are allocated when a minimum wage is in place
What will be an ideal response?
Price controls:
a. are always popular with consumers because they lower prices. b. create shortages. c. increase producer surplus because firms can now sell a greater quantity of a good at a lower price. d. are necessary to preserve equity.
Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, the equilibrium price rises, but the effect on the equilibrium quantity is ambiguous
a. True b. False Indicate whether the statement is true or false
Which of the following is often the result of free entry into monopolistic competition?
a. Losses increase while profits decrease in the long run. b. Losses are often magnified in the long run. c. Profits are often eliminated in the long run. d. Profits often increase in the long run.