Private solutions often are not possible due to the costs of negotiating and enforcing these solutions. Such costs are called:
A)transaction costs.
B)external costs.
C)deadweight losses.
D)social costs.

Question

Private solutions often are not possible due to the costs of negotiating and enforcing these solutions. Such costs are called:
A)​transaction costs.
B)​external costs.
C)​deadweight losses.
D)​social costs.

Quizplus · Accepted Answer

Transaction costs refer to the costs associated with negotiating and enforcing private solutions, such as the costs of hiring a mediator or lawyer. These costs can be prohibitively high for individuals and businesses, making private solutions difficult, if not impossible, to implement. This is why many economic transactions are mediated by the government, which can help to reduce transaction costs and facilitate mutually beneficial outcomes.

Private Solutions Often Are Not Possible Due to the Costs