s17quiz2.pagesPart IV- Answer question XXXXXXXXXXpoints). Each part is worth 5 points.12. Assume City Printer, Inc. (CP) has contracted with Purple Ts, Inc. (PT) for the delivery of a shipment of...

s17quiz2.pagesPart IV- Answer question 12 (15 points). Each part is worth 5 points.12. Assume City Printer, Inc. (CP) has contracted with Purple Ts, Inc. (PT) for the delivery of a shipment of plain purple t-shirts that will be used to the manufacture t-shirts featuring the NYU 2017 Grad logo. The contract calls for PT to deliver 100 plain purple t-shirts to CP at a price of $5 per unit. CP can sell the NYU t-shirts to a number of different retailers for $15 per unit. CP’s production costs for 100 NYU t-shirts = $6 per shirt + the cost of the plain purple t-shirts.a) In order to create the incentive for efficient breach, perfect expectation damages should be set at what level?b) Why will the level of damages you have specified ensure breach will occur only when it is efficient?c) Assume that, relying on its contract with PT, which guarantees delivery of the plain purple t- shirts within 3 days (delivery from any other supplier takes at least four days), CP enters into a contract with K-Mart on Astor Place to sell K-Mart 100 NYU t-shirts for $20 each on the condition that the finished product is delivered within four days (it takes CP one day to produce and deliver the NYU t-shirts once it has taken delivery of the plain shirts). In the event that CP cannot meet its commitment to K-Mart in the time specified, the price per t-shirt will fall to $7. In addition, if PT does not deliver the plain purple t-shirts by the date specified in the contract, CP will have to purchase the plain purple t-shirts from another company at twice the per unit price it has agreed to pay PT. The probability that PT will perform its contract with CP is 0.6. Based on this information, is CP’s reliance on the contract with PT efficient? Calculate the Marginal Expected Benefit and Marginal Expected Cost to provide evidence to support your answer.