A system of barter has substantial transactions costs because
A)taxes under such a system are generally a large fraction of the value of output.
B)traders must spend considerable time searching for trading partners.
C)the uncertainties of trade result in high legal fees being incurred to draw up binding contracts.
D)the uncertainties of trade result in high insurance premiums.

Question

Quizplus · Accepted Answer

In a barter system, traders must spend considerable time searching for trading partners, which increases transactions costs. The other options are not directly related to the transactions costs of a barter system.

A System of Barter Has Substantial Transactions Costs Because