Question

Sigmund enters into a contract with Carl. The terms are that Sigmund will purchase all the

gasoline that he wants to purchase in 2011, at a price of $2.50 per gallon, and Carl agrees to
sell on those terms. This is an example of a(n):__________

Answer 1

A contract where a buyer agrees to purchase all of their required gasoline from a seller at a set price for a specific period is known as a requirements contract.

Step-by-step explanation:

The situation described where Sigmund enters into a contract with Carl to purchase gasoline at a set price of $2.50 per gallon for the entire year of 2011 is an example of a requirements contract. In such a contract, Sigmund is the buyer who agrees to purchase all the gasoline he requires from Carl, the seller, throughout a specific time period, at an agreed-upon price. This type of arrangement is common in business settings, especially when there's a need for a predictable supply chain, and both parties want to hedge against future price fluctuations.