The country of Lydania has a complex network of pipelines that transports natural gas for millions of people. These pipelines are specifically designed for the transportation of natural gas and have limited uses outside the natural gas industry because of inherent industry regulations. These pipelines exemplify a(n)_________.
A)sunk cost
B)transaction-specific asset
C)intangible asset
D)greenfield entry

Question

Quizplus · Accepted Answer

The pipelines are described as being specifically designed for the transportation of natural gas, indicating their transaction-specific nature. They also have limited uses outside the natural gas industry due to inherent industry regulations, further emphasizing their specificity. This makes them a prime example of a transaction-specific asset.

The Country of Lydania Has a Complex Network of Pipelines