If there is a low degree of uncertainty combined with a low degree of asset specificity, _____ will be efficient.
A)long-term contracts
B)short-term contracts
C)market transactions
D)vertical integration

Question

Quizplus · Accepted Answer

When there is a low degree of uncertainty combined with a low degree of asset specificity, market transactions will be efficient. This is because there is relatively little risk of opportunistic behavior or misunderstandings between parties, and the assets involved are not highly specialized, making it easier for buyers and sellers to find each other in the market. Long-term contracts or vertical integration may be more appropriate when there is higher asset specificity or uncertainty, while short-term contracts may be less efficient due to the costs of renegotiation or searching for new suppliers.

If There Is a Low Degree of Uncertainty Combined with a Low