Which of the Following Is True with Regard to Value

question 115

Multiple Choice

Which of the following is true with regard to value and exchange?

• A) Exchange generally moves a good from a person who values it more to a person who values it less.
• B) Transaction costs reduce our ability to gain from potentially advantageous trades.
• C) Middlemen increase transaction costs and, thereby, reduce the potential gains derived from trade.
• D) Physical goods have an objective value that is unrelated to time and the person of ownership.

---

Definitions:

Property, Plant, and Equipment

Long-term tangible assets owned by a business, used in its operations to generate income, usually including buildings, machinery, and vehicles.

Net Operating Income

An indicator of a firm's earnings derived from its primary, ongoing business activities, not taking into account the subtraction of interest and taxes.

Retained Earnings

The portion of a company's profits that is saved or retained for reinvestment in the business, rather than being paid out as dividends to shareholders.

Direct Labor

The wages and other payroll costs of the employees who directly produce goods or services.