According to the theory of transaction cost economics,a market is likely to fail if:
A) There are a large number of suppliers
B) All parties to the transaction have the same level of knowledge
C) The future is highly uncertain
D) The future is highly certain

Question

Quizplus · Accepted Answer

Transaction cost economics suggests that a market can fail when transaction costs are high, and this can occur when the future is highly uncertain. When there is a high degree of uncertainty, it's difficult for parties to a transaction to anticipate and prepare for risks and costs associated with the transaction. This can lead to higher costs, inefficiencies, and ultimately, market failure. Thus, choice C is the best answer. The other options are not necessarily indicative of market failure according to transaction cost economics.

According to the Theory of Transaction Cost Economics,a Market Is