John McLeod and His Daughter Lucy Form a Partnership to Buy

question 30

Multiple Choice

John McLeod and his daughter Lucy form a partnership to buy and sell exotic guinea pigs.They agree to share the profits equally but do not make any mention in the partnership agreement of how any business capital is to be shared.John originally contributes equipment worth $2000 and Lucy contributes her expertise as a breeder.When the partnership is dissolved Lucy insists upon receiving half of the value of the equipment.Is Lucy entitled to claim this amount?

• A)Yes, the equipment has become partnership property.
• B)No, the equipment still belongs to John.
• C)Yes, Lucy is entitled to half of everything John owns.
• D)No, because Lucy's expertise cannot be 'halved'.

Evaluate the rationality behind purchasing insurance and warranties despite the cost exceeding expected claims.

Identify how individual differences in risk aversion affect financial decisions and utility.

Understand the concept of a fair insurance policy and how it is determined.

Understanding the concept of fair and unfair insurance policies.

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