Resale is difficult when
A)the good is light-weight.
B)the good is expensive.
C)transaction costs are high.
D)transaction costs are negligible.

Question

Quizplus · Accepted Answer

Resale becomes difficult when the transaction costs are high. This means that the costs incurred in finding a buyer, negotiating the price, and transferring ownership are prohibitive, leaving little incentive for the seller to resell the good. Factors that contribute to high transaction costs include information asymmetry, such as lack of knowledge about the quality or condition of the good, and regulatory barriers, such as taxes or restrictions on cross-border trade. Thus, even if the good is lightweight or inexpensive, resale may be difficult if the transaction costs are high.

Resale Is Difficult When