Max Worked in a Warehouse Owned by Fortress Storage Inc

question 43

Multiple Choice

Max worked in a warehouse owned by Fortress Storage Inc. His job consisted mainly of moving and storing expensive and sensitive pieces of computer equipment that Fortress had received from its customers. Unfortunately, while Max normally was among the company's most trusted workers, he carelessly dropped a computer that belonged to HAL Inc and that HAL had asked Fortress to store. Which of the following statements is TRUE?

• A) The court may apply the doctrine of vicarious liability only if Fortress has liability insurance.
• B) Max may be vicariously liable for Fortress's tort even if HAL's equipment was damaged while Max was doing something that Fortress had told him not to do.
• C) If Fortress is held vicariously liable, then HAL will be prevented from suing Max.
• D) As a matter of risk management, Max and Fortress both should have purchased liability insurance.
• E) Fortress may be vicariously liable only if a court decides that Max is not liable.

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Definitions:

Total Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Total Costs

sum up all the costs incurred by a business in the production of goods or services, including both fixed and variable costs.

Economic Profits

The profit a firm makes after deducting both its explicit and implicit costs, reflecting the total opportunity costs of all resources used.

Yearly Return

The total gain or loss on an investment over a one-year period, expressed as a percentage of the investment's initial value.