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Contractor a Is Negotiating to Build a Warehouse for Firm

Question 8

Multiple Choice

Contractor A is negotiating to build a warehouse for Firm B to be completed in 75 days.Contractor A's estimated cost is $200,000.Pushing forward the completion date by 15 days would allow it to reduce its cost by $30,000.The value to Firm B of the warehouse is $250,000 if completed in 75 days and $235,000 if completed in 90 days.A mutually beneficial,efficient deal:


A) means completion of the warehouse construction in 90 days at a price greater than $235,000.
B) means completion of the warehouse construction in 90 days at a price between $170,000 and $235,000.
C) is not possible as there is no zone of agreement.
D) means completion of the warehouse construction in 75 days at a price between $200,000 and $250,000.
E) is possible only if contractor A agrees to build the warehouse in 75 days.

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