Suppose a New Contracting Environment That Requires Greater Specialized Investments

question 18

Multiple Choice

Suppose a new contracting environment that requires greater specialized investments is considered.This new contract will result in

• A)an increase in the marginal benefit and result in a longer optimal contract.
• B)an increase in the marginal benefit and result in a shorter optimal contract.
• C)a decrease in the marginal benefit and result in a longer optimal contract.
• D)a decrease in the marginal benefit and result in a shorter optimal contract.

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Definitions:

UCC

Refers to the Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.

Destination Contract

A contract specifying that the seller will bear the cost and risk of the goods until they are delivered to a specific location.

Plywood

A type of engineered wood product made by gluing together several thin layers or plies of wood veneer.

Breach Of Warranty

occurs when a promised statement of fact about a product or service is not true or is violated.