Which type of costs includes all of the costs associated with an economic exchange?

• A. Fixed costs
• B. Transaction costs
• C. Variable costs
• D. Opportunity costs

Answer: (B)

Verified step by step guidance

1. Understand the concept of costs in economics: Fixed costs are expenses that do not change with the level of output, such as rent or salaries.
2. Recognize that variable costs change with the level of production or activity, like raw materials or hourly wages.
3. Opportunity costs represent the value of the next best alternative foregone when making a decision.
4. Transaction costs refer to all costs associated with making an economic exchange, including search and information costs, bargaining costs, and enforcement costs.
5. Therefore, identify that the type of costs which include all costs related to an economic exchange are transaction costs.