When the Parties to a Transaction Have Access to Different

question 99

Multiple Choice

When the parties to a transaction have access to different information:

• A)markets will be efficient.
• B)parties will voluntarily share information truthfully in order to achieve efficiency.
• C)some markets may fail to exist.
• D)parties will blindly trust one another.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, which includes labor, materials, and other variable expenses.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Total Costs

The complete sum of all expenses, both fixed and variable, incurred in the production of goods or services.