High Transactions Costs

question 78

Multiple Choice

High transactions costs

• A)occur when specialized investment is not important.
• B)make spot exchange an efficient way to obtain inputs.
• C)may be a result of buyer opportunism.
• D)may be the result of downward-sloping demand.

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Definitions:

Long-Run Average Cost Curve

A graphical representation showing the minimum average cost of producing any given level of output when all inputs, including capital, are variable.

Short-Run Average Cost Curve

A graphical representation that shows how the average cost of production changes with varying output levels in the short term.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a decreased cost per unit.

Long-Run Cost

The cost of production when all inputs, including both fixed and variable factors, can be fully adjusted, often leading to economies of scale.