Fred and Ann Are Both Given Free Tickets to See

question 515

Multiple Choice

Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that

• A) it is not possible to calculate the opportunity cost of seeing the movie because the tickets were free.
• B) both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie.
• C) it is possible to calculate the opportunity cost of seeing the movie and it is zero because the tickets were free.
• D) both bear the same opportunity cost of seeing the movie because they are doing the same thing.

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Definitions:

Penalty Clause

A provision in a contract that specifies a penalty to be paid by a party in the case of a breach of the contract.

Liquidated Damages

A predetermined sum agreed upon in a contract, payable as compensation for failure to perform specific acts or to fulfill certain conditions.

Doctrine Of Part-Performance

A legal concept in contract law that allows an unwritten contract to be enforced if one party has taken significant steps to perform their part.

Quantum Meruit

A doctrine in contract law that allows a person to recover reasonable value of services rendered, when a contract does not exist or is unclear, based on the idea of preventing unjust enrichment.