Final answer:
Cost transparency does not mean that consumers know the actual costs that merchants pay for products. This statement is false. Consumers typically see end prices that include taxes and added value, but not the merchant's base costs.
Step-by-step explanation:
Cost transparency does not refer to the ability of consumers to discover the actual costs merchants pay for products; rather, it pertains to the visibility and clarity of costs and expenses associated with a product or service to the consumer. The statement provided is false. For a market to reach equilibrium, it's essential for sellers and buyers to have full information about the product's price and quality. Lack of such information can lead to imperfect transactions or poor decision-making. Despite this necessity, actual cost transparency from merchant to consumer on the base cost of products is rare in most markets.
Moreover, consumers also absorb the cost of the taxes that businesses pay, which are often reflected in the final price of a product. These taxes contribute to various business improvements such as enhancing product safety, reducing environmental harm, and expanding services.