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:

Type II Error

Occurs in hypothesis testing when a false null hypothesis is not rejected, also known as a false negative.

Null Hypothesis

A theory proposing that no meaningful distinction exists between certain groups, attributing any detected variations to random sampling or mistakes in the experiment.

Treatment Population

A group of individuals receiving the treatment or intervention in a study to assess its effectiveness.

Control Population

A group in an experimental study that does not receive the treatment and is used as a benchmark to measure how the other tested groups compare.