Asked by Miranda Carrasco on Sep 24, 2024
Verified
If a firm anticipates that it is at a risk of being held up,it is more likely to
A) forgo the transaction completely
B) merge with its trading partner
C) exchange "hostages"
D) All the above
Hostages
Individuals held captive by others as security for the fulfillment of specific conditions or demands.
Trading Partner
An entity or country that engages in commerce or trade with another, often under agreed terms or through treaties.
Held Up
Delayed or stopped by something or someone, causing a pause in progress or movement.
- Master the concept of hold-up difficulties in business activities and utilize appropriate solutions.
Verified Answer
CM
Carin Melek4 days ago
Final Answer :
D
Explanation :
When a firm anticipates the risk of being held up, it may take various measures to mitigate this risk. These can include forgoing the transaction completely to avoid potential losses, merging with the trading partner to align interests and reduce the likelihood of opportunistic behavior, or exchanging "hostages," which means giving something of value to the other party to ensure mutual commitment to the deal. All these strategies are aimed at reducing the risk of hold-up and ensuring smoother transactions.
Learning Objectives
- Master the concept of hold-up difficulties in business activities and utilize appropriate solutions.