Which of the following is typically associated with a 'new buy' situation in economics?

• A. A firm negotiates a contract renewal for an existing supplier.
• B. A firm makes a routine purchase based on established criteria.
• C. A firm reorders a product without any modifications.
• D. A firm purchases a product or service for the first time, requiring extensive information gathering and evaluation.

Answer: (D)

Verified step by step guidance

1. Understand the concept of a 'new buy' in economics, which refers to a purchasing situation where a firm buys a product or service for the first time, often involving significant information gathering and evaluation.
2. Compare the given options to identify which scenario matches the characteristics of a 'new buy'.
3. Recognize that negotiating a contract renewal involves an existing supplier, so it is not a 'new buy' but rather a modified or continued purchase.
4. Identify that routine purchases based on established criteria or reordering without modifications are examples of 'straight rebuy' or 'modified rebuy', not 'new buy'.
5. Conclude that the correct description of a 'new buy' is when a firm purchases a product or service for the first time, requiring extensive information gathering and evaluation.