Markets Reduce Transactions Costs

question 94

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 coordinates 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:

Fixed

Refers to costs that do not vary with the level of output or production, like rent or salaries.

Long Run

A period in economics in which all factors of production and costs are variable, and firms can adjust all inputs.

Nuclear Power Plants

Facilities that use nuclear fission to generate electricity, typically by heating water to produce steam that turns turbines.

Average Total Cost Curve

A graph that shows the average total cost of producing different quantities of output, typically U-shaped, reflecting economies and diseconomies of scale.