Long-Term Contracts

question 39

Multiple Choice

Long-term contracts:

• A) are preferable to short-term contracts when there is a minimal need for cooperation.
• B) are preferable to vertical integration when it is not feasible to exchange hostages.
• C) generally result in lower prices than competitive bidding.
• D) achieve the same outcomes as vertical integration, but they incur higher bureaucratic costs.
• E) are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.

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Definitions:

Watson's Hypothesis

A theory suggesting that all human behaviors can be conditioned, put forward by John B. Watson, a pioneer in behaviorism.

Lever Pressing

An action typically used in psychological experiments as a measure of learning or behavior, often involving animals pressing a lever to receive a reward.

Extinction

In psychology, this refers to the slow reduction and eventual vanishing of a learned reaction when the previously associated conditioned stimulus is not combined with the unconditioned stimulus anymore.

Classical Conditioning

The process of learning by linking a naturally occurring stimulus with one introduced externally.