Question

Suppose you hire an employee to operate a machine that only your company can use. Identify the type of specialized investment that this situation requires.

Answer 1

human capital

Step-by-step explanation:

There are four types of specialized investments that need to be carried but are generally described as hidden costs of a business transaction:

1. site specificity : when the buyer and seller must locate a facility close to each other.
2. physical-asset specificity : when the equipment or machinery is designed to serve a specific buyer.
3. dedicated assets : general investments required to engage in an exchange transaction with a specific buyer.
4. human capital : workers must learn specific skills to perform certain tasks for a particular firm.