A buyer or seller must consider a number of risks when evaluating whether a long-term contract is necessary or even desirable. Three primary questions must be asked when developing a long-term contract and considering the risks: What is the potential for opportunism? In other words, how likely is the supplier to take advantage of the purchaser (or vice versa)? Is this the right supplier to engage in a long-term contract? C.Is there a fair distribution of risk and gains between the parties involved?

A buyer or seller must consider a number of risks when evaluating whether a long-term contract is necessary or even desirable. Three primary questions must be asked when developing a long-term contract and considering the risks: What is the potential for opportunism? In other words, how likely is the supplier to take advantage of the purchaser (or vice versa)? Is this the right supplier to engage in a long-term contract? C.Is there a fair distribution of risk and gains between the parties involved?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 13E

See similar textbooks

Similar questions

If an offer is silent as to the proper means of acceptance, then any reasonable means of acceptance is valid. True False
7 Consider a supply chain with the manufacturer, the retailer and end-users, using a buy-back contract, as below cost-benefit & demand forecasting details: F=$120,000 ; c=$30 ; w=$75 ; b=$50 ; p=$122 ; s=$15; Demand 1,800 1,920 2,040 2,160 Probability 26% 27% 29% 18% Calculate the retailer’s marginal profit, retailer’s marginal loss, manufacturer’s marginal profit. Calculate the expected profit of the retailer and the manufacturer for 4 above-mentioned demand scenarios. Then, conclude on which production quantity Q to maximize manufacturer’s expected profit, which production quantity Q to maximize retailer’s expected profit.
Crop Insurance. Consider a state in which farmers are divided equally into two types: high risk and low risk. The average annual crop loss (and possible insurance claim) is $400 for a low-risk farmer and $1,200 for a high-risk farmer. a. If all farmers were to buy insurance, what is the break-even price for the insurance company? $ (Enter your response rounded to the nearest whole number.) b. Suppose a farmer will purchase insurance only if the price (the annual premium) is no more than 50% higher than his or her average crop loss. What is the equilibrium price? $ (Enter your response rounded to the nearest whole number.)
Select the correct option Whenever the contract is actuarially equitable: Group of answer choices a. We do not know if a risk-loving individual would fully cover himself against risk. b. The individual will never want to cover from risk.
Mr. Ali offers to sell his poultry farm to Mr. Hassan for 5000 OMR. Mr. Hassan made a counter- offer, and offered 4500 OMR for the farm. Mr. Ali rejected this proposition. Later, Hassan came back and said that he now accepted the original offer of 5000 OMR. Mr. Ali rejected it. Question a. Can Hassan go to a court of law to enforce the original contract? Why or why not?
help
Before 1972, futures trading was dominated by agricultural commodities. The spectacular growth of financial futures now accounts for approximately 50% of all futures trading. Why are they so popular? Is there any risk? Which industry dominates the market?
Define consideration. Can consideration be illegal for a binding contract? Can consideration be modified in a contract? Is that ethical?
Pls help ASAP
Suppose a firm's project generates cash flows for ten years. The first-year profits are $1000, and it grows by 3% each year. If the interest rate is 10%, what is the present value of the project? (rounded to the nearest whole number) 7023 7920 8000 8023 Which of the following is false? Group of answer choices An auction is an example of consumer-consumer rivalry. Scarcity implies tradeoffs. The only resource that is available without limit is time. Economic profits consider implicit as well as explicit costs.
Sara is a homeowner looking to sell her house. She hires James, a licensed Florida broker as the listing agent. Eric is a prospective buyer looking to make an offer on Sara's house. How would you characterize each party's role from the seller's perspective? James is the client, Sara is the customer, and Eric is the agent. James is the agent, Sara is the customer, and Eric is the client. James is the client, Sara is the agent, and Eric is the customer. James is the agent, Sara is the client, and Eric is the customer.
Explain the different between takaful and insurance.