When Asset Specificity Is Very High and There Is a Lot

question 40

Multiple Choice

When asset specificity is very high and there is a lot of market uncertainty,then it is best for a firm to:

• A)buy in the open market.
• B)use a long-term contract.
• C)vertically integrate.
• D)engage in a joint venture.

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Definitions:

Cars

Motor vehicles with four wheels typically used for transportation of people rather than goods.

Trucks

Heavy vehicles used for transporting goods and materials over land.

Opportunity Cost

The cost of forfeiting the next best alternative when making a decision, representing the benefits missed when choosing one option over another.

Alfalfa

A perennial flowering plant often used as forage for livestock, valued for its high nutrient content and adaptability to diverse climates.