Which of the Following Statements Is True of Transaction Costs

question 38

Multiple Choice

Which of the following statements is true of transaction costs?

• A) When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate.
• B) When companies transact in the open market, they incur internal transaction costs.
• C) Transaction costs exclusively consist of external costs associated with economic exchanges.
• D) Transaction costs are necessary to explain and predict the boundaries of a firm.

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Definitions:

Customer Level Cost

Customer Level Cost refers to expenses directly associated with serving a specific customer, including support, communication, and delivery costs.

E-Commerce

The buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

Business Processes

A set of interconnected activities and tasks that, once completed, achieve a specific organizational goal.

Accounting Systems

The methods and records used to track and report an organization's financial transactions and statuses.