If Digipics Were to Agree to Spend a Significant Amount

question 72

Multiple Choice

If Digipics were to agree to spend a significant amount of money to establish a new assembly line for a large client, PicPro, that has unique needs that would make this assembly line largely useless for any other customer, the funds Digipics spent in establishing this line would be an example of

• A) forward vertical integration.
• B) backward vertical integration.
• C) a transaction-specific investment.
• D) opportunism.

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Definitions:

Coffee

A brewed drink prepared from roasted coffee beans, which are the seeds of berries from the Coffea plant.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers.

Income

The financial return or earnings from employment, investments, or business ventures.

Income Effect

The change in consumption that results from a change in real income, holding prices constant.