A System of Barter Has Substantial Transactions Costs Because

question 18

Multiple Choice

A system of barter has substantial transactions costs because

• A)taxes under such a system are generally a large fraction of the value of output.
• B)traders must spend considerable time searching for trading partners.
• C)the uncertainties of trade result in high legal fees being incurred to draw up binding contracts.
• D)the uncertainties of trade result in high insurance premiums.

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Definitions:

Supply Chain Cost

Encompasses all expenses related to producing and delivering products to the final customer, including production, storage, and transportation.

Supply Chain Profit

The total revenue generated from a product minus the costs incurred from raw materials to final delivery, across all participants in the supply chain.

Revenue Source

The origin or mechanism through which a business or organization generates income.

Profit Maximization

The process of increasing the difference between total revenue and total costs to achieve the highest possible profit levels.