1. Draw supply and demand for product showing the equilibrium price and quantity. illustrate what would happen if all the transactions costs of market were reduced. generally, what is the impact of transactions costs on the operation of the marketplace?

2. What happens to producer surplus and consumer surplus if transactions costs are reduced?

3. For any company operating in a marketplace, the firm attempt to maximize the value of company's worth by setting output where:

a. costs are lowest

b. P

c. MR = MC

d. AR = MC