David lives in a farm that is 100 miles away from the nearest grocery store, so he must spend $25 in gas every time he goes grocery shopping. In this case, the cost of gas is an example of a _____ cost.

Question

Quizplus · Accepted Answer

The cost of gas for David to go grocery shopping is a transaction cost, as it is an expense incurred in order to complete an exchange or transaction, in this case, the purchase of groceries.

David Lives in a Farm That Is 100 Miles Away