A) I found the part about relationships amongst consumers and producers very interesting. In particular, I found it was very interesting when the author said, "buyer and seller remain adversaries." It surprised me that, even after a relationship is established between a particular buyer and seller, and numerous transactions have taken place between the two, they continue to bargain over the price.
B) By transactions costs, the author means any costs that arise in the process of transactions that are directly involved in the transaction. One example is the time it takes for a consumer to "shop around" to find the best price.
C) High prices often occur as a result of imperfect information. This hurts the consumer because transaction costs discourage them for shopping around for prices and they must settle to some degree to one producers price. The allows producers to act as little monopolists. However, producers can also be hurt to a degree. Imperfect information prevents producers from lowering their prices to attract more customers, as there would be little effect on the number of customers they bring in.
No comments:
Post a Comment