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JR'S Business Requires a Steady Supply of Oil

Question 91

Multiple Choice

J.R.'s business requires a steady supply of oil.After interviewing several suppliers,J.R.decided to buy his oil from Dub,who agreed to sell J.R.all the oil he needs at $50 a barrel for a period of one year.Suppose that the current oil price is $50 a barrel but that price tends to fluctuate widely over the course of a year.
J.R.and Dub are considering formalizing this agreement in a contract.Which is true?


A) The contract will limit both parties' freedom to take advantage of a better deal.
B) Neither J.R.nor Dub will benefit from a written contract because the contract price is the same as the current market price.
C) J.R.will benefit from having a contract,but Dub will not because it guarantees a low price.
D) Dub will benefit from having a written contract,but J.R.will not because Dub has superior information about the future supply of oil.

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