Looking for answers? Westonci.ca is your go-to Q&A platform, offering quick, trustworthy responses from a community of experts. Join our Q&A platform to get precise answers from experts in diverse fields and enhance your understanding. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

consider two independent firms, bu1 and bu2, which initially transact with each other through spot market transactions in a competitive market. in a typical year, bu1 incurs total costs of $2 million in producing goods that bu2 buys. bu2 would be willing to pay $7.5 million for these goods. the two businesses then decide to enter into an exclusive long-term contract. due to lower sales and marketing expenses, the total costs incurred by bu1 under the long-term contract fall to $1.5 million. the better product quality resulting from closer cooperation between the two businesses increases the amount bu2 is willing to pay to $9 million. what is the synergy created by the exclusive long-term contract?

Sagot :

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We're glad you chose Westonci.ca. Revisit us for updated answers from our knowledgeable team.