Richard Writes a Letter to Sarah Authorizing Her to Sell

question 77

Multiple Choice

Richard writes a letter to Sarah authorizing her to sell his car and sends a copy of the letter to Timothy, a prospective purchaser. The next day, Richard sends a letter to Sarah revoking her authority, but he fails to notify Timothy. Sarah:

• A) has actual authority to sell the car to Timothy.
• B) has implied authority to sell the car to Timothy.
• C) has apparent authority with respect to Timothy to sell the car.
• D) is empowered under the doctrine of respondeat superior to negotiate the contract.

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Definitions:

Nonexcludable Problem

An issue characteristic of public goods, where it is not possible to prevent individuals who do not pay from consuming a good or service.

Optimal Level

The most favorable or efficient level of output or activity under given conditions, maximizing benefits or minimizing costs.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not diminish another's.

Free-rider Problem

A situation where individuals consume a good without contributing to its cost, typically in the context of public goods.