The Plaza Hotel Contracts with EZ Lawn to Have EZ

question 41

Multiple Choice

The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years.However,there is a clause in the contract that states if the hotel chooses,the contract may be terminated provided Plaza pays EZ $2,000 on termination.Which of the following is correct?

• A) The contract is unenforceable because the option to cancel clause makes the contract an illusory promise.
• B) The contract is unenforceable because the $2,000 is past consideration.
• C) The contract is unenforceable because only one party has the option to cancel.
• D) The contract is enforceable because the option to cancel clause is supported by consideration.

Comprehend the implications and areas of deadweight loss in monopolistic markets.

Grasp the conditions and mechanisms of price discrimination by monopolies.

Analyze the social efficiency and inefficiency caused by monopoly operations.

Differentiate between the profit-maximizing and socially optimal outcomes in monopoly setups.

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Definitions:

Cost of Goods Sold

Costs directly linked to the creation of goods sold by a business, encompassing materials and labor.

Raw Materials Inventory

The total cost of all the materials that are used in the production of goods but have not yet been transformed into finished products.

Raw Materials Purchases

Raw Materials Purchases involve the acquisition of basic inputs needed to manufacture goods or provide services, a crucial component of production costs.

Direct Materials Standards

These are predefined criteria determining the cost and quantity of direct materials supposed to be used in production processes.