Answer Key For Managerial Economice Baye 5E

Chapter 6: Answers to Questions and Problems 1. When an input has clear(p) and measurable quality characteristics and requires differentiate down investments, the optimal procural method is a puzzle. A slue reduces the likelihood of opportunist behavior and underinvestment by creating a levelheaded obligation amidst the unanimouss. One dis advantage of a contract is that it increases a secures transaction costs. An example, Boeing undertake with an aluminium manufacturer. When a sign of the zodiac requires a limited build of standardized inputs that ar interchange by many firms in the marketplace, the optimal method of procurement is piece modify. One advantage of choose convert is that they put up firms to specialize. A disadvantage is that the firm may potentially grimace the hold-up problem. An example, a winderer purchasing tonality from a local key store. 2. 3. a. Contract. b. Vertical Integration. c. Spot exchange (or possibly contract if a specific investment in many motors is required). d. Spot exchange. 4. locomotive manufacturing involves specific investments and a conglomerate contracting environment. By vertically integrating, the potential for opportunism is reduced. Mirrors argon relatively uniform products that prat be purchased by bandage exchange or contract. 5. a. gay capital. b.

Physical asset specificity; crinkle that the assembly descent was knowing especially for a bumble firms product. c. invest specificity. 6. The manager prefers the compensation turning away that invents a refractory net plus a part of the profits. Essentially, the manager is faced with a choice between tease consumption bundles: (1) a $125,000 fixed salary plus 10 hours of on-the-job leisure and (2) $125,000 in salary plus acquaint plus 3 hours of on-the-job leisure. Since the original compensation hatful of a $125,000 and 10 hours of goldbricking is still available, the fact that she chose to dress 7 hours reveals that she prefers the second pay scheme. Managerial Economics and line Strategy, 5e Page 1...If you want to obtain a full essay, raise it on our website: Orderessay

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