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Economic Value to Customer
Economic Value to Customer = EVCx = [LifeCycle costs of a competitor's product in relation to a home firm] - [Start-up Costs for the home firm's product] - [Post Purchase Costs for the home firm's product] + [Incremental Value of the home firm's product].
Assume that the employer (principle) wants its employee (agent) to work hard [You can safely assume that this maximizes the principle's expected profits from his business]. There a
Cardinal Theory: An Introduction In cardinal approach, utility is measured cardinally or numerically in terms of money. The consumer not only knows which one is preferred but
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