Diana Is a Personal Trainer Whose Client Charles Pays $80

question 172

Multiple Choice

Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.Before the tax,what is the total surplus?

• A)$25
• B)$20
• C)$5
• D)$0

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Definitions:

Liquidated Damages

A predetermined amount of money that must be paid as compensation for failure to fulfill a contract or meet certain conditions.

Punitive Damages

Financial compensation awarded to a plaintiff that goes beyond what is necessary to compensate for losses, intended to punish the defendant for egregious wrongdoing.

Punitive Damages

Monetary compensation awarded to an aggrieved party that exceeds simple compensation and is intended to punish the wrongdoer.

Anticipatory Breach

Anticipatory breach occurs when one party to a contract indicates, either verbally or through actions, that they will not fulfill their contractual obligations, leading to an early breach of contract.