Transactions costs are the
A) costs of using the Coase theorem.
B) opportunity costs of conducting a transaction.
C) external marginal costs of the externality.
D) reason why taxes cannot affect the inefficiency resulting from an external cost.
E) external costs when a firm pollutes.

Question

Quizplus · Accepted Answer

Transaction costs refer to the costs incurred in carrying out a transaction, such as finding a buyer/seller, negotiating the terms of the transaction, and enforcing the agreement. These costs can include time, effort, and money spent on searching for and evaluating potential exchange partners, drafting contracts, and monitoring compliance. Therefore, the opportunity costs of conducting a transaction are the best description of transaction costs.

Transactions Costs Are the