The Theory of Transaction Cost Analysis States That

question 46

Multiple Choice

The theory of transaction cost analysis states that:

• A) Short-term increases in sales volume will eliminate any switching costs acquired as the result of replacing an independent agent with an internal sales force
• B) The costs of product failure will be minimized with the use of an independent agent and maximized with an internal sales force
• C) When substantial transaction-specific assets are necessary to sell a manufacturer's product, the costs of using and administering independent agents is likely to be higher than the costs of hiring and managing an internal sales force
• D) Costs of using and administering independent agents tend to rise faster as the manufacturer's sales volume increases
• E) When substantial transaction-specific assets are necessary to sell a manufacturer's product, the costs of using and administering independent agents is likely to be lower than the costs of hiring and managing an internal sales force

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Definitions:

Staffing

The process of finding, recruiting, and training individuals to fill roles within an organization.

Valuable Resources

Assets, both tangible and intangible, that are of significant worth and importance to an individual, organization, or society.

Hiring Minorities

The practice of recruiting and employing individuals from underrepresented groups based on race, ethnicity, or other minority status.

No-layoff Policy

A commitment from an organization not to terminate employment for economic reasons, aiming to provide job security for employees.