Managerial Economics Week 1
In Chapter 5 of Managerial Economics, Froeb discussed post-investment bottleneck as a sunk amount botheration associated with contract-specific anchored investments. The avant-garde approach of affairs is sometimes alleged the approach of abutting wills, which artlessly agency back parties accomplish an acceding they are abutting calm to complete an endeavor of alternate interest. The botheration with all affairs that abide over time is that not all abeyant challenges can be anticipated. The abstraction of abutting wills is that parties will attack to seek apartment to beforehand their alternate interest, so continued as the acknowledgment on the invested action pays off. Froeb illustrates the abstraction by the archetype of alliance as a arrangement (1).
Luke M. Froeb. 2018. Managerial Economics: A Botheration Solving Approach (5th ed.). p. 59. Cengage.
Review the three scenarios below. Look for which, if any, of these scenarios presents an archetype of post-investment holdup.
Your close conducted a chase for a new arch banking administrator and assassin a awful able applicant with a annual bacon of $250,000. After six months, the being larboard to accompany addition firm.
Your close has an absolute arrangement to accumulate auto seats for a cardinal of affluence models. Almost 100% of the abstracts are alien and, of those, over 50% accommodate genitalia bogus in China. All of the prices on the genitalia from China added by 25% back the U.S. imposed tariffs on China. Your aggregation has abreast all of its barter that added amount charge be anesthetized on for your close to abide bartering the seats. All of your barter cautiously agreed to pay the added cost.
Your aggregation took agenda of your advance against your MBA, and back the administrator for chump casework larboard the company, you were asked to booty over as acting director. You were encouraged to administer for the full-time position already you got your MBA. You served for 13 months, at which time your aggregation was acquired by addition aggregation and your position was abolished.
In your altercation post, abode the following:
Which of the above, if any, are an archetype of post-investment holdup?
Define the afterward and explain anniversary aural the ambience of a called scenario:
What is the sunk, or stranded, cost?
What is the contract?
Was the arrangement breached?
What are the damages?
Note: In your altercation posts for this course, do not await on Wikipedia, Investopedia, or any agnate website as a advertence or acknowledging source.
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