Which of the following is TRUE regarding transactions costs and information costs?
A) Both benefit borrowers at the expense of savers.
B) Both benefit savers at the expense of borrowers.
C) Transactions costs hurt savers while information costs hurt borrowers.
D) Both create profit opportunities for those who can reduce these costs.

Question

Quizplus · Accepted Answer

Both transaction costs and information costs create profit opportunities for those who can reduce them. For example, a financial institution that can lower transaction costs for clients in a particular market can attract more business and generate profits. Similarly, firms that can obtain and process information more efficiently can gain a competitive advantage and earn higher profits. Neither benefits one side at the expense of the other.

Which of the Following Is TRUE Regarding Transactions Costs and Information