In Which of the Following Situations Is There a Third

question 73

Multiple Choice

In which of the following situations is there a third party incidental beneficiary who would be unable to enforce the agreement?

• A) Wholesalers, when the buyer of a business promises the seller that he will pay outstanding debts to wholesalers who have supplied inventory for the business.
• B) Workers, where a contractor agrees to post a performance bond to assure payment of workers and material suppliers.
• C) A debtor, where a new partner enters an accounting firm and agrees to pay a share of debts incurred prior to his admission to the firm.
• D) A doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.

---

Definitions:

Zero Profits

A situation where a firm’s total revenues are exactly equal to its total costs, leading to no net profit or loss.

MC = ATC

This is the point where Marginal Cost equals Average Total Cost, typically illustrating the most efficient scale of production in the short run.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, which leads to firms being price takers.

Smartphones

Mobile phones that offer advanced functionalities, including internet connectivity, apps, and touchscreen interface.