ARE 112- Midterm 1 questions with answers

ARE 112- Midterm 1 questions with
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answers

MECE - CORRECT ANSWERS ✔✔-Mutually Exclusive (each issue is
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separate & distinct) |\ |\




Collectively Exhaustive (every aspect comes under only one
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issue)
-McKinsey Tool |\




--know all the facts/details
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-guard against making early selection of solutions before all other
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facts are known
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Mother City - CORRECT ANSWERS ✔✔-Caral, Peru; "mother city"
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of Incan civilization
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-complexity and scope |\ |\




-hierarchy of living arrangements |\ |\ |\




-served as a major trade area --> rise of class divisions
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Transaction Costs - CORRECT ANSWERS ✔✔-Williamson interview
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-cost associated with the time and effort needed to search out,
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negotiate, and consummate an exchange (cost of doing business)
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--must economize |\




--have detailed knowledge of attributes of transactions
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, Cost of Uncertainty - CORRECT ANSWERS ✔✔-Williamson
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interview
-making agreements in the context of uncertainty
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--hostage situation |\ |\




--develop bilateral dependency (mutual advantages)
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--introduces a kind of deterrence |\ |\ |\ |\




-reduce uncertainty --> reduce costs
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Bounded Rationality - CORRECT ANSWERS ✔✔-Williamson
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interview
-can't choose the convenient assumption
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--adhere closely to reality and behavior that intends to be
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rational -- not capable of maximizing in all situations
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--limitation on ability to work towards the right answer
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Incomplete contracts - CORRECT ANSWERS ✔✔-Williamson |\ |\ |\ |\ |\ |\


interview
-transaction costs, cost of uncertainty, and bounded rationality all
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cause incomplete contracts
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-cannot maximize all benefits of a transaction because they are
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not aware of all the factors
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--complex contracts |\




--disallowed by old apparatus |\ |\ |\




--both parties are not equal
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