Long-Term Contracts

question 49

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 exactly 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:

Sperm

A male reproductive cell or gamete that can fertilize an egg cell.

Eggs

The female reproductive cells in animals and plants; in animals, often enclosed in a protective shell.

Locations

Specified places or positions typically described by their geographical situation or coordinates.

Ova

The female reproductive cells or eggs in animals and certain algae, which are capable of developing into a new organism upon fertilization.