Compared to a situation where transaction costs are zero, the existence of transaction costs

A) will reduce the volume of trade.
B) will reduce the gains from trade.
C) may lead some buyers and sellers to employ middlemen.
D) All of the above are correct.

Transaction Costs

Expenses incurred in making an economic exchange, including search, bargaining, and enforcement of contracts.

Volume Of Trade

The total quantity of shares or contracts traded for a specified financial instrument or market within a specified period.

Gains From Trade

The increase in utility or welfare that countries or individuals obtain by engaging in voluntary exchange of goods and services.