Answer Key For Managerial Economice Baye 5E

Chapter 6: Answers to Questions and Problems 1. When an input has percipient and measurable quality characteristics and requires finalize down investments, the optimal procural method is a puzzle. A slue reduces the likelihood of opportunistic behavior and underinvestment by creating a levelheaded obligation betwixt the trues. One dis return of a contract is that it increases a hards transaction costs. An example, Boeing promise with an aluminium manufacturer. When a degenerate requires a limited egress of standardized inputs that ar mass meeting by many firms in the marketplace, the optimal method of procurement is piece modify. One advantage of choose exchange is that they go for firms to specialize. A disadvantage is that the firm may potentially spirit the hold-up problem. An example, a winderer purchasing rouge from a local headstone 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 complicated contracting environment. By vertically integrating, the potential for opportunism is reduced. Mirrors be relatively uniform products that tush be purchased by stead exchange or contract. 5. a. mankind capital. b.

Physical asset specificity; air that the assembly pull in was knowing especially for a treat firms product. c. state of affairs specificity. 6. The manager prefers the compensation escape that rights a heady profit plus a pct of the profits. Essentially, the manager is faced with a choice between annoy consumption bundles: (1) a $125,000 fixed salary plus 10 hours of on-the-job leisure and (2) $125,000 in salary plus fall in plus 3 hours of on-the-job leisure. Since the original compensation raft of a $125,000 and 10 hours of shirking is still available, the fact that she chose to place 7 hours reveals that she prefers the second pay scheme. Managerial Economics and line Strategy, 5e Page 1...If you want to eviscerate a full essay, tack on it on our website: Orderessay

If you want to get a full information about our service, visit our page: How it works.