Switching Costs Are the Costs That Consumers Must Bear to Switch

question 50

True/False

Switching costs are the costs that consumers must bear to switch from a product based on one technological standard to a product based on another technological standard.

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Definitions:

Payback Period

The length of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Salvage

The prognosticated residual valuation of an asset upon reaching the end of its utility.

Profitability Index

A financial metric that calculates the relationship between the present value of future cash flows and the initial investment cost.

Preference Rule

A guideline or rule that prioritizes alternatives based on certain criteria, often used in decision-making processes.