Sue Had a Beautiful Lakeside Cottage That Had Been in Her

question 114

Multiple Choice

Sue had a beautiful lakeside cottage that had been in her family for years. Times became a little tight, and Sue decided she had no choice but to sell the property. Sue agreed to sell the cottage property to her neighbour Bob for the sum of $250,000. Although Sue was ecstatic about the price early on, she soon changed her mind. There were too many memories for her to give the property up. Which of the following, by itself, would be the biggest barrier to Bob in enforcing the agreement?

• A) Unknown to Bob, at the time of the agreement Sue was mentally incapacitated.
• B) The $250,000 price was not adequate under the circumstances.
• C) Bob and Sue had an agreement that their contract was not to be enforceable.
• D) Although Sue had written a letter to Bob that discussed the essential terms of the agreement, Bob and Sue had not executed a written agreement.
• E) No money had yet exchanged hands.

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Definitions:

Elastic Demand

Refers to a situation where the quantity demanded of a good or service significantly changes in response to a change in its price. High elasticity indicates that consumers are more sensitive to price changes.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in its price, income levels, or other factors.

Perfectly Inelastic

A situation where demand or supply does not change in response to a change in price.