The Economic Value Which Can Be Created by a Transaction

question 19

Multiple Choice

The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer) , is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185.If each gains $25 from this transaction, which of the following conclusions can be drawn?

• A)Transaction costs are zero.
• B)Luis has higher bargaining power than Ed.
• C)Ed has higher bargaining power than Luis.
• D)Transaction costs are positive.

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Definitions:

Laboratory Conditions Doctrine

A principle in legal or experimental contexts emphasizing the importance of controlled, predictable environments for the accuracy of outcomes or decisions.

Union Campaign

An organized effort by a labor union to gain membership, negotiate better terms for workers, or address issues affecting its members.

NLRB

The National Labor Relations Board is a federal agency responsible for enforcing U.S. labor laws regarding collective bargaining and handling complaints of unfair labor practices.

Union Instrumentality

The perceived effectiveness of labor unions in achieving desired outcomes such as higher wages, job security, and better working conditions for their members.