If transaction costs can be reduced in a marketplace,then total producer and consumer surplus will
A)increase.
B)stay the same.
C)decrease.
D)increase first and then decrease.

Question

Quizplus · Accepted Answer

Transaction costs refer to the costs incurred by buyers and sellers in order to complete a transaction in a marketplace (such as search costs, bargaining costs, and legal costs). If these costs are reduced, it becomes easier and cheaper for producers and consumers to engage in transactions, which leads to an increase in the quantity of goods and services exchanged. As a result, the total producer and consumer surplus will increase.

If Transaction Costs Can Be Reduced in a Marketplace,then Total