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Buyers use a variety of methods to provide incentives to a seller to complete work early or within certain contractually specified time frames. One such incentive is the use of liquidated damages.
From the seller’s perspective, liquidated damages are what form of incentive?
A. Positive
B. Negative
C. Nominal
D. Risk-prone
Correct Answer: B
Explanation/Reference:
Explanation:
Liquidated damages are considered negative incentives because they result in a loss of revenue for the seller if it fails to perform rather than a gain in revenue if it performs well.
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