ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Bargaining costs
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Transaction costs
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Contracting costs
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Barter costs
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Detailed explanation-1: -The time and resources spent trying to exchange goods and services are called transaction costs. For example, shipping costs would be included in the transaction costs because that cost is incurred trying to exchange a good to a customer.
Detailed explanation-2: -Money helps to reduce transaction costs.
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.
Detailed explanation-5: -One of the simplest ways to reduce transaction costs is to forego traditional brick-and-mortar stores altogether, and simply go to an online model. An online store in lieu of a physical one can substantially reduce costs – rent, utilities, employees, etc.