Which of the Following Is True Regarding Value, Transaction Costs

question 219

Multiple Choice

Which of the following is true regarding value, transaction costs, and exchange?

• A) Middlemen can be viewed as agents who create value by reducing transaction costs and, thereby, facilitating gains from exchange.
• B) Middlemen fail to create value since they do not expand the supply of physical goods.
• C) A good or service has a given value regardless of who uses it or how it is used.
• D) Voluntary exchange reduces value by channeling goods into the hands of people who value them least.

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Definitions:

Average Collection Period

A measure of how long it takes a firm to convert a credit sale (internal store credit, not credit card sales) into a usable form (cash).

Quick Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventories.

Goods Sold

Goods sold refers to the products that a company has provided to customers in exchange for payment; it is often used in the context of calculating revenues and inventory turnover.

Current Ratio

This is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.