When can a seller's investment in reducing transaction cost increase the price of the product to customers but still leave them better off?
When the seller tries to reduce transaction cost through informative advertising, the customer's cost of acquiring information reduces, thereby making them better off.
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The circular flow diagram includes the following players:
a. government, firms, financial markets, goods markets b. factor markets, goods markets, financial markets, firms c. households, firms, government, rest of the world d. households, factor markets, goods markets, firms
Welfare economics explains which of the following in the market for televisions?
a. The government sets the price of televisions; firms respond to the price by producing a specific level of output. b. The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. c. The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. d. The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.