The marginal cost of financial transactions rises with the volume of financial transactions due to
A)congestion.
B)power failure.
C)bank failure.
D)reserve requirements.
E)perceived instability of banks.

Question

Quizplus · Accepted Answer

Congestion occurs when there are too many financial transactions happening simultaneously, leading to a slowdown in processing time and an increase in the marginal cost of each transaction. This is why high-volume traders often pay more in fees to ensure that their transactions are processed quickly and smoothly. Power failure, bank failure, reserve requirements, and perceived instability of banks may also impact the cost of financial transactions, but none of them directly correlates with the volume of financial transactions, unlike congestion.

The Marginal Cost of Financial Transactions Rises with the Volume