Answer:
1. Absence of Rent
2. No Salesperson's salary
3. Absence of Utility Bills
4. No inventory Holding Costs
5. Average Cost Per Unit
Step-by-step explanation:
Companies such as ebay (and the internet more generally) lowers transaction costs because of the following:
1. Absence of Rent: Companies such as ebay (and the internet more generally) lowers transaction costs because they do not pay store rent which is a significant business cost for offline businesses that operate in brick and mortar stores.
2. No Salesperson's salary: Online companies like ebay do not pay salesperson's salaries and by so doing they reduce transaction costs
3. Absence of Utility Bills: Online businesses like ebay do not pay utility billslike lighting costs and water rates etc, and this is another way of transaction cost reduction
4. No inventory Holding Costs: Online businesses do not incur transaction holding costs as they keep no warehouses for their inventory.
5. Average Cost Per Unit: In an internet business, you are bound to make profit even for one unit because you don't have to sell a number of units to cover for monthly fixed costs before you make profit. Transaction cost is same whether for one or a thousand units.
These are some of the ways online businesses have reduced costs.