Managerial Economics 13e by McGuigan, Moyer, Harris

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Managerial Economics 13e by McGuigan, Moyer, Harris is the 13th edition of the Managerial Economics: Applications, Strategies and Tactics textbook authored by James R. McGuigan, JRM Investments, R. Charles Moyer, University of Louisville, and Frederick H. deB. Harris, School of Business, Wake Forest University, and published in 2014 by Cengage Learning.

  • Absolute cost advantage. A comparison of nominal costs in two locations, companies, or economies.
  • Adverse selection. A limited choice of lower-quality alternatives attributable to asymmetric information.
  • Agency costs. Costs associated with resolving conflicts of interest among shareholders, managers, and lenders.
  • Allocative efficiency. A measure of how closely production achieves the least-cost input mix or process, given the desired level of output.
  • Appraisals. An estimate of value by an independent expert.
  • Arbitrage. Buying cheap and selling elsewhere for an immediate profit.
  • Asset specificity. The difference in value between first-best and second-best use.
  • Asymmetric information. Unequal, dissimilar knowledge.
  • Authorization level. Capacity authorized for sale in lower margin segments.
  • Autocorrelation. An econometric problem characterized by the existence of a significant pattern in the successive values of the error terms in a linear regression model.
  • Average product. The ratio of total output to the amount of the variable input used in producing the output.
  • Backward induction. To reason in reverse temporal order.
  • Barriers to exit. Economic losses resulting from non-redeployable assets or contractual constraints upon business termination.
  • Benchmarking. A comparison of performance in similar jobs, firms, plants, divisions, and so forth.
  • Benefit-cost ratio. The ratio of the present value of the benefits from a project or program (discounted at the social discount rate) to the present value of the costs (similarly discounted).
  • Best-reply response. An action that maximizes self-interest from among feasible choices.
  • Bonding mechanism. A procedure for establishing trust by pledging valuable property contingent on your nonperformance of an agreement.
  • Brand loyalty. A customer sorting rule favorable to incumbents.
  • Break-even analysis. A calculation of the output level at which total contributions cover direct plus indirect fixed costs.
  • Break-even sales change analysis. A calculation of the percentage increase in unit sales required to justify a price discount, given the contribution margin.
  • Capital assets. A durable input that depreciates with use, time, and obsolescence.
  • Capital budgeting. The process of planning for and evaluating capital expenditures.
  • Capital expenditure. A cash outlay designed to generate a flow of future cash benefits over a period of time extending beyond one year.
  • Cartel. A formal or informal agreement among firms in an oligopolistic industry that influences such issues as prices, total industry output, market shares, and the division of profits.
  • Ceteris paribus. Latin for "all other things held constant."
  • Chain store paradox. A prediction of always accommodative behavior by incumbents facing entry threats.
  • Class action suits. A legal procedure for reducing the search and notification costs of filing a complaint.
  • Closed-end leases with fixed residual values. A credible commitment mechanism for limiting the depth of price promotions and the rate of planned obsolescence.
  • Coase theorem. A prediction about the emergence of private voluntary bargaining in reciprocal externalities with low transaction costs.
  • Cobb-Douglas production function. A particular type of mathematical model, known as a multiplicative exponential function, used to represent the relationship between the inputs and the output.
  • Coefficient of determination. A measure of the proportion of total variation in the dependent variable that is explained by the independent variable(s).
  • Coefficient of variation. The ratio of the standard deviation to the expected value. A relative measure of risk.
  • Cointegrated. Stochastic series with a common order of integration and exhibiting an equilibrium relationship such that they do not permanently wander away from one another.
  • Common-value auction. Auction where bidders have identical valuations when information is complete.
  • Company audit. A governance mechanism for separating random disturbances from variation in unobservable effort.
  • Complementary goods. Complements in consumption whose demand decreases when the price of the focal product rises.
  • Complementors. Independent firms that enhance the focal firm's value proposition.
  • Concentrated market. A relevant market with a majority of total sales occurring in the largest four firms.
  • Congestion pricing. A fee that reflects the true marginal cost imposed by demand in excess of capacity.
  • Consolidated. A relevant market whose number of firms has declined through acquisition, merger, and buyouts.
  • Conspicuous focal point. An outcome that attracts mutual cooperation.
  • Contestable markets. An industry with exceptionally open entry and easy exit where incumbents are slow to react.
  • Contingent payments. A fee schedule conditional on the outcome of uncertain future events.
  • Contracts. Third-party-enforceable agreements designed to facilitate deferred exchange.
  • Contribution analysis. A comparison of margins earned to the direct fixed costs attributable to a decision.
  • Contribution margin. The difference between price and variable cost per unit.
  • Cooperative game. Game structures that allow coalition formation, side payments, and binding third-party enforceable agreements.
  • Core competencies. Technology-based expertise or knowledge on which a company can focus its strategy.
  • Cost fixity. A measure of fixed to total cost that is correlated with gross profit margins.
  • Cost of capital. The cost of funds that are supplied to a firm. The cost of capital is the minimum rate of return that must be earned on new investments undertaken by a firm.
  • Cost-based strategy. A business-level strategy that relies upon low-cost operations, marketing, or distribution.
  • Cost-benefit analysis. A resource allocation model that can be used by public sector and not-for-profit organizations to evaluate programs or investments on the basis of the magnitude of the discounted costs and benefits.
  • Cost-benefit analysis. A resource allocation model that can be used by public and not-for-profit sector organizations to evaluate programs or investments on the basis of the magnitude of the discounted benefits and costs.
  • Cost-effectiveness analysis. An analytical tool designed to assist public decision makers in their resource allocation decisions when benefits cannot be easily measured in terms of dollars but costs can be monetarily quantified.
  • Credible commitment. A promise that the promise-giver is worse off violating than fulfilling.
  • Credible threat. A conditional strategy the threat-maker is worse off ignoring than implementing.
  • Cross price elasticity. The ratio of the percentage change in the quantity demanded of Good A to the percentage change in the price of Good B, assuming that all other factors influencing demand remain unchanged.
  • Cross-sectional data. Series of observations taken on different observation units (e.g., households, states, or countries) at the same point in time.
  • Cyclical variations. Major expansions and contractions in an economic series that usually are longer than a year in duration.
  • Degree of operating leverage (DOL). The percentage change in a firm's earnings before interest and taxes (EBIT) resulting from a given percentage change in sales or output.
  • Demand function. A relationship between quantity demanded per unit of time and all the determinants of demand.
  • Derivative. A measure of the marginal effect of a change in one variable on the value of a function. Graphically, it represents the slope of the function at a given point.
  • Diseconomies of scale. Rising long-run average total costs as the level of output is increased.
  • Dividend valuation model. A model (or formula) stating that the value of a firm (i.e., shareholder wealth) is equal to the present value of the firm's future dividend payments, discounted at the shareholder's required rate of return. It provides one method of estimating a firm's cost of equity capital.
  • Dominant strategy. An action rule that maximizes the decision maker's welfare independent of the actions of other players.
  • Durable goods. Goods that yield benefits to the owner over a number of future time periods.
  • Dutch auctions. A descending-price auction.
  • Dynamic pricing. A price that varies over time based on the balance of demand and supply, often associated with Internet auctions.
  • Economic profit. The difference between total revenue and total economic cost. Economic cost includes a "normal" rate of return on the capital contributions of the firm's partners.
  • Economies of scope. Economies that exist whenever the cost of producing two (or more) products jointly by one plant or firm is less than the cost of producing these products separately in separate plants or firms.
  • Efficient contract breach. A set of incentive-compatible procedures for awarding expectation damages in breachof-contract suits.
  • Efficient rationing. A customer sorting rule in which high-willingness-to-pay customers absorb the capacity of low-price entrants.
  • Endgame reasoning. An analysis of the final decision in a sequential game.
  • Engineering cost techniques. A method of estimating cost functions by deriving the least-cost combination of labor, capital equipment, and raw materials required to produce various levels of output, using only industrial engineering information.
  • English auctions. An ascending-price auction.
  • Expectation damages. A remedy for breach of contract designed to elicit efficient precaution and efficient reliance on promises.
  • Expected value. The weighted average of the possible outcomes where the weights are the probabilities of the respective outcomes.
  • Experience goods. Products and services whose quality is undetectable when purchased.
  • External diseconomy of scale. An increase in unit costs reflecting higher input prices.
  • Externality. A spillover of benefits or costs from one production or utility function to another.
  • First-order condition. A test to locate one or more maximum or minimum points of an algebraic function.
  • Fixed costs. The costs of inputs to the production process that are constant over the short run.
  • Focal outcomes of interest. Payoffs involved in an analysis of equilibrium strategy.
  • Folk theorem. A conclusion about cooperation in repeated Prisoner's Dilemma.
  • Forward sales contracts. A consensual agreement to exchange goods delivered in the future for cash today, with no possibility of a performance excuse.
  • Fragmented. A relevant market whose market shares are uniformly small.
  • Free trade area. A group of nations that have agreed to reduce tariffs and other trade barriers.
  • Frustration of purpose doctrine. An illustration of a default rule of contract law that can result in excusal of contract promises.
  • Full contingent claims contract. An agreement about all possible future events.
  • Full-cost pricing. A method of determining prices that cover overhead and other indirect fixed costs, as well as the variable and direct fixed costs.
  • Game theory. A theory of interdependent decision making by the participants in a conflict of interest or opportunity for collaboration situation.
  • Game tree. A schematic diagram of a sequential game.
  • Governance mechanisms. Processes to detect, resolve, and reduce post-contractual opportunism.
  • Grim trigger strategy. A hypersensitive strategy involving infinitely long punishment schemes.
  • Gross profit margin. Revenue minus the sum of variable cost plus direct fixed cost, also known as direct costs of goods sold in manufacturing.
  • Herfindahl-Hirschman Index. A measure of market concentration equal to the sum of the squares of the market shares of the firms in a given industry.
  • Heteroscedasticity. An econometric problem characterized by the lack of a uniform variance of the error terms surrounding the regression line.
  • Hostage mechanism. An exchange of assets that is worth more to the hostage giver than to the hostage recipient in order to establish credibility of threats or commitments.
  • Identification problem. A difficulty encountered in empirically estimating a demand function by regression analysis. This problem arises from the simultaneous relationship between two functions, such as supply and demand.
  • Incentive compatibility constraint. An assurance of incentive alignment.
  • Incentive-compatible revelation mechanism. A procedure for eliciting true revelation of privately held information from agents with competing interests.
  • Income elasticity. The ratio of the percentage change in quantity demanded to the percentage change in income, assuming that all other factors influencing demand remain unchanged.
  • Incomplete information. Uncertain knowledge of payoffs, choices, and other factors.
  • Incremental contribution analysis. An incremental managerial decision that analyzes the change in operating profits (revenue -- variable costs -- direct fixed costs) available to cover indirect fixed costs.
  • Industry analysis. Assessment of the strengths and weaknesses of a set of competitors or line of businesses.
  • Infinitely repeated games. A game that lasts forever.
  • Information technology strategy. A business-level strategy that relies on IT capabilities.
  • Inherent business risk. The inherent variability or uncertainty of a firm's operating earnings (earnings before interest and taxes).
  • Inputs. A resource or factor of production, such as a raw material, labor skill, or a piece of equipment that is employed in a production process.
  • Internal economies of scale. Declining long-run average costs as the rate of output for a product, plant, or firm is increased.
  • Internal hedge. A balance sheet offset or foreign payables offset to fluctuations in foreign receipts attributable to exchange rate risk.
  • Internal rate of return (IRR). The discount rate that equates the present value of the stream of net cash flows from a project with the project's net investment.
  • Inverse intensity rationing. A customer sorting rule that assures that low-willingness-to-pay customers absorb the capacity of low-price entrants.
  • Iterated dominant strategy. An action rule that maximizes self-interest in light of the predictable dominant strategy behavior of other players.
  • Law of comparative advantage. A principle defending free trade and specialization in accordance with lower relative cost.
  • Learning curve effect. Declining unit cost attributable to greater cumulative from longer production runs.
  • Lemons markets. Asymmetric information exchange leads to the low-quality products and services driving out the higher-quality products and services.
  • Life cycle pricing. Pricing that varies throughout the product life cycle.
  • Linear incentives contract. A linear combination of salary and profit sharing intended to align incentives.
  • Long run. The period of time in which all the resources employed in a production process can be varied.
  • Maquiladora. A foreign-owned assembly plant in Mexico that imports and assembles duty free components for export and allows owners to pay duty only on the "value added."
  • Marginal analysis. A basis for making various economic decisions that analyzes the additional (marginal) benefits derived from a particular decision and compares them with the additional (marginal) costs incurred.
  • Marginal cost. The incremental increase in total variable cost that results from a oneunit increase in output.
  • Marginal factor cost (MFCL). The amount that an additional unit of the variable input adds to total cost.
  • Marginal product. The incremental change in total output that can be obtained from the use of one more unit of an input in the production process (while holding constant all other inputs).
  • Marginal rate of technical substitution (MRTS). The rate at which one input may be substituted for another input in producing a given quantity of output.
  • Marginal revenue product (MRPL). The amount that an additional unit of the variable production input adds to total revenue; also known as marginal value added.
  • Marginal revenue. The change in total revenue that results from a one-unit change in quantity demanded.
  • Marginal use value. The additional value of the consumption of one more unit; the greater the utilization already, the lower the use value remaining.
  • Marginal utility. The use value obtained from the last unit consumed.
  • Marginal value added. The increase in revenue added by a stage of production or service.
  • Market concentration ratio. The percentage of total industry output produced by the 4, 8, 20, or 50 largest firms.
  • Maximin strategy. A criterion for selecting actions that minimize absolute losses.
  • Maximum sustainable yield (MSY). The largest production harvest that can be produced by the resource stock as a perpetuity.
  • Minimum efficient scale (MES). The smallest scale at which minimum costs per unit are attained.
  • Mixed bundling. Selling multiple products both separately and together for less than the sum of the separate prices.
  • Mixed Nash equilibrium strategy. A strategic equilibrium concept involving randomized behavior.
  • Monopolistic competition. A market structure very much like pure competition, with the major distinction being the existence of a differentiated product.
  • Monopoly. A market structure characterized by one firm producing a highly differentiated product in a market with significant barriers to entry.
  • Moral hazard problem. A problem of postcontractual opportunism that arises from unverifiable or unobservable contract performance.
  • Multicollinearity. An econometric problem characterized by a high degree of intercorrelation among explanatory variables in a regression equation.
  • Nash equilibrium strategy. An equilibrium concept for non-dominant strategy games.
  • Natural monopoly. An industry in which maximum economic efficiency is obtained when the firm produces, distributes, and transmits all of the commodity or service produced in that industry. The production of natural monopolists is typically characterized by increasing returns to scale throughout the relevant range of output.
  • Net present value (NPV). The present value of the stream of net cash flows resulting from a project, discounted at the required rate of return (cost of capital), minus the project's net investment.
  • Network effects. An exception to the law of diminishing marginal returns that occurs when the installed base of a network product makes the efforts to acquire new customers increasingly more productive.
  • Noncooperative games. Game structures that prohibit collusion, side payments, and binding agreements enforced by third parties.
  • Non-redeployable assets. Assets whose value in second-best use is near zero.
  • Non-redeployable reputational asset. A reputation whose value is lost if sold or licensed.
  • Non-redeployable, specific assets. Assets whose replacement cost basis for value is substantially greater than their liquidation value.
  • Normal form of the game. A representation of payoffs in a simultaneous-play game.
  • Oligopoly. A market structure in which the number of firms is so small that the actions of any one firm are likely to have noticeable impacts on the performance of other firms in the industry.
  • Operating leverage. The use of assets having fixed costs in an effort to increase expected returns.
  • Operating risk exposure. A change in cash flows from foreign or domestic sales resulting from currency fluctuations.
  • Opportunity costs. The value of a resource in its next-best alternative use.
  • Optimal incentives contract. An agreement about payoffs and penalties that creates appropriate incentives.
  • Optimal mechanism design. An efficient procedure that creates incentives to motivate the desired behavioral outcome.
  • Optimal output for a given plant size. Output rate that results in lowest average total cost for a given plant size.
  • Optimal overbooking. A marginal analysis technique for balancing the cost of idle capacity (spoilage) against the opportunity cost of unserved demand (spill).
  • Optimal plant size for a given output rate. Plant size that results in lowest average total cost for a given output.
  • Optimal plant size. Plant size that achieves minimum long-run average total cost.
  • Overall production efficiency. A measure of technical and allocative efficiency.
  • Parallel imports. The purchase of a foreign export product in one country to resell as an unauthorized import in another country.
  • Partial derivative. A measure of the marginal effect of a change in one variable on the value of a multivariate function while holding constant all other variables.
  • Participation constraint. An assurance of ongoing involvement.
  • Patent. A legal government grant of monopoly power that prevents others from manufacturing or selling a patented article.
  • Pecuniary externality. A spillover that is reflected in prices and therefore results in no inefficiency.
  • Pooling equilibrium. A decision setting that elicits indistinguishable behavior.
  • Post-contractual opportunistic behavior. Actions that take advantage of a contract partner's vulnerabilities and are not specifically prohibited by the contract terms.
  • Present value. The value today of a future amount of money or a series of future payments evaluated at the appropriate discount rate.
  • Price discrimination. The act of selling the same good or service, distributed in a single channel, at different prices to different buyers during the same period of time.
  • Price elasticity of demand. The ratio of the percentage change in quantity demanded to the percentage change in price, assuming that all other factors influencing demand remain unchanged.
  • Price leadership. A pricing strategy followed in many oligopolistic industries. One firm normally announces all new price changes. Either by an explicit or by an implicit agreement, other firms in the industry regularly follow the pricing moves of the industry leader.
  • Price signaling. A communication of price change plans, prohibited by antitrust law.
  • Price skimming. A new-product pricing strategy that results in a high initial product price being reduced over time as demand at the higher price is satisfied.
  • Principal-agent problem. An incentives conflict in delegating decision-making authority.
  • Private-value auction. Auction where the bidders have different valuations even when information is complete.
  • Probability. The percentage chance that a particular outcome will occur.
  • Product differentiation strategy. A business-level strategy that relies upon differences in products or processes affecting perceived customer value.
  • Production function. A mathematical model, a spreadsheet, or a graph that relates the maximum feasible quantity of output that can be produced from given amounts of various inputs.
  • Production isoquant. An algebraic function or a geometric curve representing all the various combinations of two inputs that can be used in producing a given level of output.
  • Production process. A fixed proportions production relationship.
  • Prospect theory. A basis for hypothesizing that the satisfaction from avoiding losses exceeds the anticipation of equal-value prospective gains.
  • Protection level. Capacity reserved for sale in higher margin segments.
  • Public goods. Goods that may be consumed by more than one person at the same time with little or no extra cost, and for which it is expensive or impossible to exclude those who do not pay.
  • Public utilities. A group of firms, mostly in the electric power, natural gas, and communications industries, that are closely regulated by one or more government agencies. The agencies control entry into the business, set prices, establish product quality standards, and influence these total profits that may be earned by the firms subject to scale economies.
  • Pure competition. A market structure characterized by a large number of buyers and sellers of a homogeneous (nondifferentiated) product. Entry and exit from the industry is costless, or nearly so. Information is freely available to all market participants, and there is no collusion among firms in the industry.
  • Quantitative easing. Expansionary monetary policy focused on longer-term bonds and mortgage backed securities.
  • Random rationing. A customer sorting rule reflecting randomized buyer behavior.
  • Real terms of trade. Comparison of relative costs of production across economies.
  • Reciprocal externality. A spillover that results from competing incompatible uses.
  • Relational contracts. Promissory agreements of coordinated performance among owners of highly interdependent assets.
  • Relative purchasing power parity. A relationship between differential inflation rates and long-term trends in exchange rates.
  • Relevant market. A group of firms belonging to the same strategic group of competitors.
  • Reliance relationships. Long-term, mutually beneficial agreements, often informal.
  • Reliant assets. At least partially nonredeployable durable assets.
  • Reservation prices. The maximum price a customer will pay to reserve a product or service unto his or her own use.
  • Returns to scale. The proportionate increase in output that results from a given proportionate increase in all the inputs employed in the production process.
  • Revenue management. A cross-functional order acceptance and refusal process.
  • Risk. A decision-making situation in which there is variability in the possible outcomes, and the probabilities of these outcomes can be specified by the decision maker.
  • Sales penetration curve. An S-shaped curve relating current market share to the probability of adoption by the next target customer, reflecting the presence of increasing returns.
  • Search goods. Products and services whose quality can be detected through market search.
  • Seasonal effects. Variations in a time series during a year that tend to appear regularly from year to year.
  • Second-order condition. A test to determine whether a point that has been determined from the first-order condition is either a maximum point or a minimum point of the algebraic function.
  • Secular trends. Long-run changes (growth or decline) in an economic time-series variable.
  • Self-enforcing reliance relationship. A non-contractual, mutually beneficial agreement.
  • Separating equilibrium. A decision setting that elicits distinguishable behavior.
  • Sequential game. A game with an explicit order of play.
  • Shareholder wealth. A measure of the value of a firm. Shareholder wealth is equal to the value of a firm's common stock, which, in turn, is equal to the present value of all future cash returns expected to be generated by the firm for the benefit of its owners.
  • Short run. The period of time in which one (or more) of the resources employed in a production process is fixed or incapable of being varied.
  • Simultaneous game. A strategy game in which players must choose their actions simultaneously.
  • Slippery slope. A tendency for wars of attrition to generate mutual losses that worsen over time.
  • Social discount rate. The discount rate to be used when evaluating benefits and costs from public sector investments.
  • Speculation. Buying cheap and selling later for a delayed profit (or loss).
  • Spill. Confirmed orders that cannot be filled.
  • Spoilage. Perishable output that goes unsold.
  • Spot market transactions. An instantaneous, one-time-only exchange of typically standardized goods between anonymous buyers and sellers.
  • Standard deviation. A statistical measure of the dispersion or variability of possible outcomes.
  • Standard error of the estimate. The standard deviation of the error term in a regression model.
  • Sterilized interventions. Central bank transactions in the foreign exchange market accompanied by equal offsetting transactions in the government bond market, in an attempt to alter short-term interest rates without affecting the exchange rate.
  • Stockouts. Demand in excess of available capacity.
  • Strategic holdout. A negotiator who makes unreasonable demands at the end of a unanimous consent process.
  • Strategy game. A decision-making situation with consciously interdependent behavior between two or more of the participants.
  • Stratified lottery. A randomized mechanism for allocating scarce capacity across demand segments.
  • Subgame perfect equilibrium strategy. An equilibrium concept for non-cooperative sequential games.
  • Substitute goods. Alternative products whose demand increases when the price of the focal product rises.
  • Sunk cost. A cost incurred regardless of the alternative action chosen in a decisionmaking problem.
  • Supply curve. A relationship between price and quantity supplied per unit time, holding other determinants of supply constant.
  • Supply function. A relationship between quantity supplied and all the determinants of supply.
  • Survivor technique. A method of estimating cost functions from the shares of industry output coming from each size class over time. Size classes whose shares of industry output are increasing (decreasing) over time are presumed to be relatively efficient (inefficient) and have lower (higher) average costs.
  • Sustainable competitive advantages. Difficult-to-imitate features of a company's processes or products.
  • Target return-on-investment pricing. A method of pricing in which a target profit, defined as the desired profit rate on investment × total gross operating assets, is allocated to each unit of output to arrive at a selling price.
  • Technical efficiency. A measure of how closely production achieves maximum potential output given the input mix or process.
  • Threshold sales curve. A level of advance sales that triggers reallocation of capacity.
  • Time-series data. A series of observations taken on an economic variable at various points in time.
  • Transaction risk exposure. A change in cash flows resulting from contractual commitments to pay in or receive foreign currency.
  • Translation risk exposure. An accounting adjustment in the home currency value of foreign assets or liabilities.
  • Trembling hand trigger strategy. A punishment mechanism that forgives random mistakes and miscommunications.
  • Two-person zero-sum game. Game in which net gains for one player necessarily imply equal net losses for the other player.
  • Unraveling problem. A failure of cooperation in games of finite length.
  • Value at risk. The notional value of a transaction exposed to appreciation or depreciation because of exchange rate risk.
  • Value proposition. A statement of the specific source(s) of perceived value, the value driver(s), for customers in a target market.
  • Value-in-use. The difference between the value customers place on functions, cost savings, and relationships attributable to a product or service and the life cycle costs of acquiring, maintaining, and disposing of the product or service.
  • Variable input costs. The costs of the variable inputs to the production process.
  • Versioning. A new product rollout strategy to encourage early adoption at higher prices.
  • Vertical requirements contract. A thirdparty enforceable agreement between stages of production in a product's value chain.
  • Vickrey auction. An incentive-compatible revelation mechanism for eliciting sealed bids equal to private value.
  • Volume discount. Reduced variable cost attributable to larger purchase orders.
  • Winner's curse. Concern about overpaying as the highest bidder in an auction.
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