Understanding Friction Costs

What is the term for costs that are not included in the listed price but are still involved in a purchase?

• Direct costs

• Indirect costs

• Fixed costs

• Variable costs

Why do companies often hide the true friction costs from buyers?

• To increase transparency

• To comply with regulations

• To encourage more purchases

• To reduce production costs

Which of the following is an example of a direct cost for a pencil factory?

• Wood for pencils

• Billboard advertising

• Factory rent

• Insurance policies

What additional costs might a homebuyer face beyond the sale price of a house?

• Concert tickets and gas

• Shipping fees and sales tax

• Factory equipment and materials

• Closing costs and inspection fees

What is an opportunity cost in the context of societal projects?

• The environmental impact

• The direct cost of labor

• The benefit of an alternative use of resources

• The cost of materials used