Long-term contracts become longer:
A) when specialized investment becomes more important.
B) when the exchange environment is more complex.
C) when spot markets work well.
D) when marginal costs are declining.

Question

Quizplus · Accepted Answer

Long-term contracts become longer when specialized investment becomes more important because such investments require more time and resources to develop, making the parties involved more likely to want to secure a longer-term commitment to ensure a return on their investment.

Long-Term Contracts Become Longer