Question 1

If parties to a contract can anticipate the court's decision in the event of a dispute with some degree of certainty:

Accepted Answer

A) opportunistic behavior will never be detected. 
B) opportunistic behavior will be partially detected. 
C) there will be less room for opportunism. 
D) only one of the parties will be able to act opportunistically. 
A) opportunistic behavior will never be detected. 
B) opportunistic behavior will be partially detected. 
C) there will be less room for opportunism. 
D) only one of the parties will be able to act opportunistically.

Question 2

Which of the following investments can be classified as specific assets?

Accepted Answer

A) Opening a restaurant in the business district of a city. 
B) Purchase of additional cotton bales expecting a rise in demand for cotton garments. 
C) Leasing out land in a tourist spot to build a retail outlet. 
D) Purchasing specialized equipment for a hydro-electric power project that will not produce electricity at a different location. 
A) Opening a restaurant in the business district of a city. 
B) Purchase of additional cotton bales expecting a rise in demand for cotton garments. 
C) Leasing out land in a tourist spot to build a retail outlet. 
D) Purchasing specialized equipment for a hydro-electric power project that will not produce electricity at a different location.

Question 3

Sam, a fish wholesaler, entered into a contract with a department store to supply herring at a price of $2.50 per pound for a year.When a hurricane closed most fisheries Sam increased the price to $3.25 per pound and refused to sell at the old price.Sam's behavior is an example of opportunism.

Accepted Answer

A) True 
 B)False

Question 4

Economic value of a transaction where the buyer is allowed to deal with several sellers at the same time will always be higher than a transaction which ties the buyer to a particular seller by contract.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a problem encountered in a transaction involving a principal/agent relationship?

Accepted Answer

A) Absence of monitoring and supervision 
B) Excessive dependence on forecasts and expectations 
C) High investment in industry specific assets 
D) Government interference and market volatility 
A) Absence of monitoring and supervision 
B) Excessive dependence on forecasts and expectations 
C) High investment in industry specific assets 
D) Government interference and market volatility

Question 6

Which of the following is true about specific performance?

Accepted Answer

A) It is an amount paid by a breaching party to the suffering party to cover the latter's loss. 
B) It arises in situations which involve written promises. 
C) It is usually ordered by the court when the economic value of the transaction is difficult to quantify. 
D) It is common in case of contracts having a negative influence on the society as a whole. 
A) It is an amount paid by a breaching party to the suffering party to cover the latter's loss. 
B) It arises in situations which involve written promises. 
C) It is usually ordered by the court when the economic value of the transaction is difficult to quantify. 
D) It is common in case of contracts having a negative influence on the society as a whole.

Question 7

When does an incomplete contract prove beneficial?

Accepted Answer

A contract may remain incomplete because

If parties to a contract can anticipate the court's decision in the event of a dispute with some degree of certainty:

Which of the following investments can be classified as specific assets?

Sam, a fish wholesaler, entered into a contract with a department store to supply herring at a price of $2.50 per pound for a year.When a hurricane closed most fisheries Sam increased the price to $3.25 per pound and refused to sell at the old price.Sam's behavior is an example of opportunism.

Economic value of a transaction where the buyer is allowed to deal with several sellers at the same time will always be higher than a transaction which ties the buyer to a particular seller by contract.

Which of the following is a problem encountered in a transaction involving a principal/agent relationship?

Which of the following is true about specific performance?

When does an incomplete contract prove beneficial?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 10: The Economics of Contracts

If parties to a contract can anticipate the court's decision in the event of a dispute with some degree of certainty:

Which of the following investments can be classified as specific assets?

Sam, a fish wholesaler, entered into a contract with a department store to supply herring at a price of $2.50 per pound for a year.When a hurricane closed most fisheries Sam increased the price to $3.25 per pound and refused to sell at the old price.Sam's behavior is an example of opportunism.

Economic value of a transaction where the buyer is allowed to deal with several sellers at the same time will always be higher than a transaction which ties the buyer to a particular seller by contract.

Which of the following is a problem encountered in a transaction involving a principal/agent relationship?

Which of the following is true about specific performance?

When does an incomplete contract prove beneficial?

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters