James Owned Real Estate

question 16

Multiple Choice

James owned real estate.He leased the building to two tenants.An insurance agent leased the first floor and a law firm leased the second floor.James sold the land to Mary,who used the entire building for her business.She discovered that there were underground storage tanks buried in the land.She had to remove the tanks and then sued James and the former tenants for the cost of removing the tanks,even though none of them knew the tanks had been there.In this situation:

• A) James and the two tenants are liable.
• B) James is liable to Mary, but the tenants are not.
• C) The tenants are liable to Mary, but James is not.
• D) Neither James nor the tenants are liable to Mary.

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Definitions:

Marginal Cost

The cost added by producing one additional unit of a product or service.

Kink

A sudden change in the rate or direction of a curve or line, often used in economics to describe a sharp change in a demand or supply curve.

Kinked Demand Curve

A demand curve that has a distinct bend or kink, typically used in oligopoly models, suggesting that a firm will face different elasticities for price increases versus price decreases.

Lower Prices

A decrease in the cost of goods or services, often resulting in increased demand or consumer purchasing power.