Jade Owns a Loft That She Leases to Key and Liu

question 38

Multiple Choice

Jade owns a loft that she leases to Key and Liu. If Jade sells the loft, Key and Liu

• A) become the tenants of the new owner.
• B) remain Jade's tenants until the end of the lease term.
• C) must immediately vacate the premises.
• D) become the landlord.

---

Definitions:

Adverse Selection

A situation where asymmetric information leads to the selection of undesirable participants in a transaction or contract, often seen in insurance markets.

Consumer Surplus

The divergence between the total sum consumers are inclined and able to disburse for a merchandise or service, and the total sum they actually disburse.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption activities.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits that could have been received if a different decision were made.