ECONOMICS
MARKET FAILURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
The costs to individuals of making a deal.
|
|
|
A study that compares the costs and benefits to society of providing a public good.
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Transaction costs are expenses incurred when buying or selling a good or service. Transaction costs represent the labor required to bring a good or service to market, giving rise to entire industries dedicated to facilitating exchanges.
Detailed explanation-2: -A transaction cost is any expense incurred when conducting an economic transaction. For example, while purchasing a product or foreign currency, there will be some transaction charges (in addition to the currency’s price). The transaction cost could be monetary, extra time, or inconvenience.
Detailed explanation-3: -According to theory, there are four main types of transaction costs namely, bargaining costs, opportunity costs, search costs, and policing/enforcement costs.
Detailed explanation-4: -Examples of common transaction costs are labor, transportation, broker fees, bank charges, commissions, etc. The nature and magnitude of transaction costs vary in different business scenarios. Nevertheless, these costs play a huge role in business management and economic growth.
Detailed explanation-5: -Search and information costs. These are the costs associated with looking for relevant information and meeting with agents with whom the transaction will take place. Bargaining costs. Policing and enforcement costs. 10-Dec-2022