Reeni Was Interested in Purchasing a Car

question 18

Multiple Choice

Reeni was interested in purchasing a car.After searching the classified ads,she found a car in which she was interested,being sold by Ethan,whom she had never met.Ethan knew that his car was in need of new tires,a new muffler,and would soon need a new clutch and a brake job.Consequently,he was hoping that,when they met,Reeni wouldn't ask too many questions.When she wanted to go for a test drive,Ethan gave her the keys and said that he trusted her to go alone and that doing so would allow her to test it in a less inhibited fashion.Really,he just didn't want her to ask about any of the car's problems.Reeni took the car by herself and,on the basis of its performance,bought it at Ethan's listed price,no questions asked.Which of the following statements is most likely TRUE?

• A)Ethan is not required to disclose the car's problems during pre-contractual negotiations if Reeni does not ask about them.
• B)Silence can never amount to a misrepresentation.
• C)Ethan owed Reeni a special duty to disclose the problems with his car.
• D)By failing to accompany Reeni in the test drive,Ethan breached a duty of utmost good faith.
• E)Reeni would succeed in an action against Ethan for misrepresentation.

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Definitions:

Explicit Cost

Direct, out-of-pocket payments for resources employed in the production of goods or services.

Marginal Cost

The additional cost incurred by producing and selling one more unit.

Fixed-Cost Fallacy

Consideration of costs that do not vary with the consequences of your decision (also known as the sunk-cost fallacy).

Depreciation Costs

The allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear and tear, age, or obsolescence.