Zach is a franchisee with Digger's Doggies, a chain of hotdog shops. He was doing well until several other Digger's Doggies franchisees got in trouble and were forced to close their shops. Soon afterward, Zach's business declined and was also forced to close. This is an example of(A) management by exception.(B) an economic shakeout at work.(C) the coattail effect.(D) the law of diminishing returns.

The correct answer is letter "C": the coattail effect.

Explanation:

The coattail effect is a term mainly used in Politics that describes a situation in which a candidate running for an office and who is usually at the top of preference helps to attract voters for other candidates. In economics, the term might have a negative connotation. It implies businesses that belong to the same industry dragging each other to failure because of other factors rather than competition.

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