A System of Barter Has Substantial Transactions Costs Because

question 18

Multiple Choice

A system of barter has substantial transactions costs because

• A)taxes under such a system are generally a large fraction of the value of output.
• B)traders must spend considerable time searching for trading partners.
• C)the uncertainties of trade result in high legal fees being incurred to draw up binding contracts.
• D)the uncertainties of trade result in high insurance premiums.

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Definitions:

Cost of Goods Sold

Costs directly related to the creation of products a company sells, which encompass both the cost of materials and labor.

Ending Inventory

The total value of all inventory, including raw materials, work-in-progress, and finished goods, remaining at the end of an accounting period.

LIFO Perpetual

An inventory costing method where the last items added to inventory are considered the first sold, continuously updated for each transaction.

Inventory Value

The total cost or market value of all the goods and materials held by a company for the purpose of resale.