Suppose General Motors is trying to hire a small firm to manufacture the door handles for Buick

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Suppose General Motors is trying to hire a small firm to manufacture the door handles for Buick sedans. The task requires an investment in expensive capital equipment that cannot be used for any other purpose. Why might the president of the small firm refuse to undertake this venture without a long-term contract fixing the price of the door handles?
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Principles of Economics

ISBN: 978-0073511405

5th edition

Authors: Robert Frank, Ben Bernanke

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