Question

Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example of:_______.

a. an implicit cost.
b. a transaction cost.
c. a sunk cost.
d. an opportunity cost.

Answer 1

b. a transaction cost.

Step-by-step explanation:

Transaction costs can be regarded as expenses which is been incurred during the buying or selling of a good/ service.Transaction costs gives representation of the labor which is required in bringing a particular good/ service to the market,. They are cost required to make any economic trade in regards to participation in a market.

example of transaction cost is

Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem.