What Is an Output Contract

question 32

Multiple Choice

What is an output contract?

• A)A contract in which a buyer agrees to purchase all of his or her goods from one seller.
• B)A contract between a manufacturer and a distributor where the distributor only buys from the manufacturer and is contractually prevented from trading with the manufacturer's competitors
• C)A contract in which the seller guarantees to sell all of its output to one buyer,and the buyer agrees to accept the entire quantity.
• D)A contract in which a seller agrees to sell a product or service to the buyer only on the condition that the buyer also purchases an additional product from the seller.

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Definitions:

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to changes in its price, indicating the sensitivity of consumers to price changes.

Increasing Block Rate

A pricing structure where the unit price of a service or commodity increases with the amount consumed, commonly used in utility and service pricing to encourage conservation.

Second-degree Price Discrimination

A pricing strategy where prices vary based on the quantity consumed or purchased, not by who purchases or their personal characteristics.

Quantity Consumed

The total amount of a product or resource used by individuals, households, or an economy within a specified time frame.