Answer to Question 1
Many aspects of specificity can raise the cost of redeployment and the risks of
opportunism:
1 . Task specificity: Specialized equipment is often necessary for low-cost production. One manufacturer's machine may only work for another make of car after costly modification.
2 . Locational specificity: Once built, facilities like electrical generators are immovable.
3 . Dedicated specificity: Equipment purchased for providing a specific service cannot be reused for other services.
4 . Human specificity: Workers can also have degrees of specificity. An employer's investment in company-specific skills can make a worker more productive, but that worker also has leverage during a salary review because if she leaves the employer incurs the cost of training a replacement.
Answer to Question 2
False
