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

Question

Quizplus · Accepted Answer

Transactions costs refer to the costs incurred in the process of conducting a transaction, such as search costs, bargaining costs, and enforcement costs. These costs can make it difficult or inefficient to complete a transaction, and can affect the behavior of economic agents. For example, high transaction costs may discourage individuals from engaging in market transactions, and instead opt for alternatives such as self-sufficiency, bartering, or reliance on social networks.

Transactions Costs Are the