In a firm fixed price contract, if market prices _____ the stated contract price because of outside factors such as competition, changes in technology, or raw material prices, the _____ assumes the risk or financial loss.
A)rise above….purchaser
B)stay the same….seller
C)stay the same….purchaser
D)fall below….purchaser
E)None of these answers.

Question

Quizplus · Accepted Answer

In a firm fixed price contract, the price agreed upon is set and fixed. If market prices fall below the stated contract price, the purchaser benefits from the lower cost. However, if market prices rise above the stated contract price, the seller assumes the risk or financial loss. Therefore, in this scenario, the correct answer is D - fall below, purchaser.

In a Firm Fixed Price Contract, If Market Prices _____