Long-Term Contracts

question 8

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 does 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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