Which describes an exclusivity provision in output contracts?

An exclusivity provision in output contracts refers to a situation where a seller is obligated to sell all of their production or output to a specific buyer. This means that the seller commits to dedicatedly supplying their entire output in a given period to this designated buyer, thus preventing them from selling to any other purchaser during that time. This arrangement benefits the buyer by ensuring a steady supply of goods and helps the seller by potentially providing a guaranteed market for their products.

The other options do not accurately represent the nature of an exclusivity provision. For instance, allowing a buyer to choose any supplier contradicts the principle of exclusivity, which is inherently about limiting sales to a particular buyer. Similarly, the idea that a seller can change the buyer at any time undermines the commitment required in an exclusivity clause. Lastly, restricting a buyer to certain types of goods does not capture the essence of an exclusivity provision, which revolves around an all-or-nothing agreement concerning the seller's complete output. Therefore, stating that a seller must sell all their output to a designated buyer best encapsulates what an exclusivity provision in output contracts entails.