There are, however, other disadvantages-—or costs-
of using the price mechanism. It may be desired to make
a long—term contract for the supply of some article or service,
This may be due to the fact that ii one contract is made
for a longer period, instead of several shorter ones, then
certain costs of making each contract will he avoided.
Or, owing to the risk attitude of the people concerned,
they may prefer to make a long rather than 2. short-term
contract. Now, owing to the difficulty of forecasting, the
longer the period of the contract is for the supply of the
commodity or service, the less possible, and indeed, the
less desirable it is for the person purchasing to specify what
the other contracting party is expected to do. It may well
be a matter of indifference to the person supplying the
service or commodity which of several courses of action
is taken, but not to the purchaser of that service or commodity. But the purchaser will not know which of these
several courses he will want the supplier to take.