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Penelope is considering buying a CD from Don. Penelope values the CD at $12 and has negotiated a price of $10 with Don. Don
Penelope is considering buying a CD from Don. Penelope values the CD at $12 and has negotiated a price of $10 with Don. Don will get the CD from Barry (a distributor) who will deliver the CD at a cost of $8 or $14. The probability the CD is delivered to Don by Barry for a cost of $8 is equal to p. (a) For any contract between Penelope and Don, what would expectations damages be and what would Don and Penelope do in the event expectations damages were in place? (b) For any contract between Penelope and Don, what would reliance damages be and what would Don and Penelope do in the event reliance damages were in place? Suppose that Penelope could also buy the CD from Carol. Carol can get the CD with certainty from her supplier (at a cost of $9) and will deliver it to Penelope at a price of $11. (c) For any contract between Penelope and Don, what would opportunity cost damages be and what would Don and Penelope do in the event opportunity cost damages were in place?
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