Suppose the Most You Would Be Willing to Pay for a Plane

question 94

Multiple Choice

Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is:

• A)$250.
• B)$175.
• C)$75.
• D)$0.

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Definitions:

Fair Market Value

The price at which an asset would exchange hands between a willing buyer and seller, each having reasonable knowledge of the relevant facts, and neither being under compulsion to transact.

Breach of Contract

Occurs when one party fails to fulfill their obligations under a contract, allowing the other party to seek legal remedies.

Unilateral Mistake

A situation in contract law where only one party is mistaken about a basic assumption on which a contract is made, which can impact the enforceability of the contract.

Mistake

An incorrect belief or understanding regarding a fact, judgment, or event that can affect the validity of a contract.