Markets Reduce Transactions Costs

question 156

Multiple Choice

Markets reduce transactions costs

• A)by decreasing the time spent searching for information about goods and services
• B)only when they have a highly structured set of rules like the New York Stock Exchange
• C)because each market uses the same set of rules for buying and selling goods and services
• D)only when the government can coordinate the plans of many buyers and sellers
• E)when prices are set by the sellers and are not determined by negotiation between the buyers and the sellers

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, which is considered a non-operating expense on the income statement.

Gross Profit

The revenue a company retains after subtracting the expenses related to the production and sale of its goods or the provision of its services.

Operating Expenses

Recurring expenses related to the normal operations of a business, such as salaries, rent, utilities, and marketing costs, excluding the cost of goods sold.

Cost of Goods Sold

The expenditures directly related to generating the products a firm sells, which include the costs of materials and labor.