Reference book: Managerial Economics and Business Strategy

CONCEPTUAL AND COMPUTATIONAL QUESTIONS 1. Discuss the optimal method for procuring inputs that have well-defined and measurable quality specifications and require highly specialized investments, What are the primary advantages and disadvantages of acquiring inputs through this means? Give an example not used in the textbook that uses this method of procurement. 2. Discuss the optimal method for procuring a modest number of standardized inputs that are sold by many firms in the marketplace. What are the primary advantages and disadvantages of using this method to acquire inputs? Give an example not used in the textbook that uses this method of procurement. 3. Identify whether each of the following transactions involves spot exchange, contract, or vertical integration. a. Barnacle, Inc., has a legal obligation to purchase 2 tons of structural steel per week to manufacture conveyor frames. b. Exxon-Mobil uses the oil extracted from its wells to produce raw polypropylene, a type of plastic. c. Boat Lifts R Us purchases generic AC motors from a local distributor. d. Kaspar Construction-a home-building contractor-purchases 50 pounds of nails from the local Home Depot