Cindy Agrees in Writing to Pay Bob $5,000 to "Accidentally

question 59

Multiple Choice

Cindy agrees in writing to pay Bob $5,000 to "accidentally" hit and kill her horse,which has a large insurance policy,with his truck.Bob hits but does not kill the horse,and Cindy refuses to pay him.In their suit against each other for breach of contract,the court will consider​ 

• A) ​only Bob to be at fault. 
• B) ​only Cindy to be at fault. 
• C) ​both Bob and Cindy to be at fault, but Bob to be more at fault than Cindy. 
• D) ​Bob and Cindy to be equally at fault.

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Definitions:

Fixed Costs

Costs that do not change with the level of goods or services produced in the short term.

Short Run

A period in economics where at least one factor of production is fixed, limiting the firm's ability to adjust to changes in market demand.

Variable Costing

An accounting method where variable costs are charged to cost units and fixed costs are treated as period costs.

Cost Behavior

Refers to the way different types of production costs change when there is a change in the level of production.