Small investors face higher transaction costs on the financial market becausesome transaction fees are fixed cost. For every dollar invested by small investors, a higher portion ofproceeds from investment has to be used to pay for it.small investors are discriminated on the financial market. They have to pay a higher price.small investors have advantage investing through financial intermediaries.small investors can benefit from the economy of scale.

Answered: Small investors face higher transaction…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Small investors face higher transaction costs on the financial market because
some transaction fees are fixed cost. For every dollar invested by small investors, a higher portion of
proceeds from investment has to be used to pay for it.
small investors are discriminated on the financial market. They have to pay a higher price.
small investors have advantage investing through financial intermediaries.
small investors can benefit from the economy of scale.

Expert Solution

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Fixed costs are those expenses that remain constant regardless of whether production volumes rise or fall. This is because they are not directly involved in the manufacture or delivery of a product or service. As a result, fixed costs are considered as indirect costs. However, they do contribute to overall production costs. As a result, rather from being expensed, fixed costs are depreciated over time.

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