Private Solutions Often Are Not Possible Due to the Costs

question 171

Multiple Choice

Private solutions often are not possible due to the costs of negotiating and enforcing these solutions. Such costs are called:

• A)​transaction costs.
• B)​external costs.
• C)​deadweight losses.
• D)​social costs.

---

Definitions:

Direct Labor Hours

The cumulative hours expended by workers directly engaged in the manufacturing of products or provision of services.

Static Budget

A budget that remains unchanged regardless of changes in activity levels, sales volume, or other variables during the budget period.

Variable Costs

Costs that vary directly with the level of production or volume of output, which includes expenses like raw materials and labor directly involved in production.

Fixed Costs

Expenses that do not change with changes in production level or sales volume.