Kevin Disconnects the Odometer on His Car and Then Drives

question 17

Multiple Choice

Kevin disconnects the odometer on his car and then drives it for another 15,000 miles after which he decides to sell it.When Linda inquires about the vehicle,Kevin says "the odometer indicates the car has only 20,000 miles on it." Kevin's statement is:

• A) a statement of opinion
• B) an innocent misrepresentation
• C) a material misstatement of fact
• D) a material misstatement of opinion
• E) a misrepresentation of law

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases with the reduction in average costs.

Fixed Costs

Fixed costs are business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Capital

Resources made and used by humans to produce goods and services, including buildings, machinery, and equipment.

Barriers to Entry

Obstacles that prevent new competitors from easily entering an industry or area of business.