Wendell Bought a Widget from Sharon and Used a Cheque

question 11

Multiple Choice

Wendell bought a widget from Sharon and used a cheque to pay the purchase price of $10 000. Wendell made the cheque payable to Sharon personally. That cheque was drawn on Wendell's account at the Bank of Gander. A thief stole the cheque from Sharon, forged her general endorsement, and sold the cheque to Oren. Oren then endorsed the cheque and negotiated it to Abby. Which of the following statements is TRUE?

• A) In the final analysis, the Bank of Gander will necessarily suffer the loss if it honoured the cheque and paid $10 000 to Abby.
• B) If the Bank of Gander paid $10 000 to Abby and debited Wendell's account, Wendell can force the bank to repay $10 000 into his account if he acts promptly.
• C) Abby is entitled to sue Wendell because the forgery does not affect the fact that he promised to pay $10 000.
• D) Wendell no longer owes a debt to Sharon.
• E) Because forgery is a real defence, Abby cannot sue anyone except the person who committed the forgery.

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Definitions:

Total Output

The total quantity of goods or services produced by a firm or economy.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.

Variable Costs

Expenses that vary directly with the level of production or volume of output.

Average Variable Cost

The total variable cost divided by the quantity of output produced, showing how variable costs change with output levels.