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November 23, 2022

Suppose a construction company is hired to create a new economics building for CSUN. Let V = $100,000; R = $5,000; P = $75,000.

(2) Suppose a construction company is hired to create a new economics building for CSUN. Let V = $100,000; R = $5,000; P = $75,000. (a) Calculate expectation damages and reliance damages given these numbers. Suppose the builder’s production costs, C, are uncertain at the time the contract is made. (b) Over what range of C is it efficient for the builder to breach? (c) Over what ranges of C will the builder actually breach under expectation damages, reliance damages, and zero damages? (d) Suppose the builder’s cost of production turns out to be $125,000. Will performance occur?

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