Question

Under the zero-sum approach, rewards are distributed such that ________.

Answer 1

The answer is E) rewards increase for a group at the expense of loss for another group

In economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain or loss is directly involved with the gains or losses of other participants, therefore there can only be rewards for agroup if another competitor losses.

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Answer 2

The correct answer is "E)"

In business, a zero-sum approach implies that one participant in the environment will achieve a profit at the expense of another participant in the same environment. For example, a business that sells furniture buys raw material from suppliers overseas. Competition is fierce and the company applies aggressive discounts. Consequently, the company informs the supplier that it will no longer accept the current price of lumber and expects a reduced price for it. With little bargaining power, the supplier is forced to lower its price at the expense of making drastic administrative changes (including layoffs). The furniture company ends up selling and gaining profit but this benefit is not seen by the supplier.