QuestionJuly 15, 2025

Which of the following is the best example of transaction costs? a. The extra money a person could have earned by working over the weekend had he not chosen to go camping with his friends. b. The amount of time a person spends looking for a house. c. The increase in production costs resulting from an increase in the hourly wages of workers. d. The costs incurred because of an increase in the number of temporary workers.

Which of the following is the best example of transaction costs? a. The extra money a person could have earned by working over the weekend had he not chosen to go camping with his friends. b. The amount of time a person spends looking for a house. c. The increase in production costs resulting from an increase in the hourly wages of workers. d. The costs incurred because of an increase in the number of temporary workers.
Which of the following is the best example of transaction costs? a. The extra money a person could have earned by working over the weekend had he not chosen to go camping with his friends. b. The amount of time a person spends looking for a house. c. The increase in production costs resulting from an increase in the hourly wages of workers. d. The costs incurred because of an increase in the number of temporary workers.

Solution
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Answer

b. The amount of time a person spends looking for a house. Explanation 1. Identify Transaction Costs Transaction costs are expenses incurred when buying or selling goods or services, beyond the price of the goods themselves. They include search and information costs, bargaining costs, and policing and enforcement costs. 2. Analyze Each Option a. Opportunity cost, not transaction cost. b. Time spent searching is a transaction cost. c. Production cost, not transaction cost. d. Labor cost, not transaction cost.

Explanation

1. Identify Transaction Costs<br /> Transaction costs are expenses incurred when buying or selling goods or services, beyond the price of the goods themselves. They include search and information costs, bargaining costs, and policing and enforcement costs.<br /><br />2. Analyze Each Option<br /> a. Opportunity cost, not transaction cost.<br /> b. Time spent searching is a transaction cost.<br /> c. Production cost, not transaction cost.<br /> d. Labor cost, not transaction cost.
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