What are transaction costs? What are some ways in which society reduces transaction costs?
What will be an ideal response?
Transaction costs are costs associated with exchanging goods and services. They include information costs associated with finding out price, quality, and other characteristics of the good and the other party in the exchange, and costs of contracting and enforcing the contract. Organized markets, retail stores and shopping malls, advertising, and middlemen are several institutions that have developed to reduce transaction costs.
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The costs involved with breaking a ban placed on a good depend on all of these except the:
A. punishment associated with rule breaking. B. likelihood of being caught. C. likelihood of being punished if caught. D. ability of the public or individuals to pay for those costs.
Foreign direct investment that takes the form of a new startup facility is called:
a. acquisition FDI. b. greenfield FDI. c. intermediary FDI. d. brownfield FDI.
Which of the following is NOT true for a perfectly competitive firm in the long run?
A. MC > LAC B. MR = MC C. SAC = LAC D. Price = MC
People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power. If inflation and income grow at the same rate, is this complaint valid? Explain carefully
What will be an ideal response?