Wealth and Wealth Bank utilizes the janitorial services of Rob's Scrub-All to keep their buildings clean. Rob's provides all the necessary cleaning supplies, training, background security checks (since the crew works after hours) and all other associated expenses. The other available janitorial services do not typically provide security checks and a client such as a bank would have to hire guards to watch the work of the janitors. This expense effectively limits the bank to utilizing only Rob's services. Which of the following does this illustrate?

Question

Quizplus · Accepted Answer

Switching costs are fixed costs buyers face if they change suppliers. In this case, the bank would have to have a permanent security guard, a fixed cost, should it decide to switch from Rob's Scrub-All to another cleaning service.

Wealth and Wealth Bank Utilizes the Janitorial Services of Rob's