Question

The creation of knowledge assets is typically characterized by __________.

a. high upfront costs and subsequent high variable costs
b. high fixed costs and high variable costs
c. high upfront costs and low variable costs
d. low upfront costs and high variable costs

Answer 1

The creation of knowledge assets generally involves high initial setup costs, but once operational, the ongoing variable costs are relatively low, making option 'c' the correct answer.

Step-by-step explanation:

The creation of knowledge assets is typically characterized by high upfront costs and low variable costs. This is because setting up such systems, including a website that provides medical advice for example, involves significant initial expenses related to infrastructure, such as writing content, designing and developing the site, and acquiring computer space. However, once the site is operational, the costs associated with serving additional customers tend to be low, as it mainly includes monitoring and updating. Therefore, the correct answer to the question is 'c. high upfront costs and low variable costs'.