When Transaction Costs Are Positive

question 13

Multiple Choice

When transaction costs are positive:

• A)property rights are absent.
• B)the marginal value of rights is equal to their marginal costs in equilibrium.
• C)property rights are fully defined.
• D)the marginal value of rights is larger than to their marginal costs in equilibrium.

---

Definitions:

Sacrifice Ratio

The sacrifice ratio is an economic concept that measures the cost of reducing inflation in terms of lost output or unemployment.

Disinflates

A process in which the rate of inflation decreases over time but does not turn negative.

Disinflation

A slowdown in the rate of inflation, indicating a reduction in the rate at which prices for goods and services rise over time.

Favorable Supply Shock

A situation in which the supply of goods increases, leading to lower prices and benefiting consumers.