Bill,a Builder,wants to Submit a Bid on a City Sewer

question 40

Multiple Choice

Bill,a builder,wants to submit a bid on a city sewer project.He computes the cost,but mistakenly omits the cost of one item.Accordingly,he submits a bid of $430,000 to the city.The next highest bid is $675,000,and the rest of the bids are even higher.The city is happy to have such a low bid,so it accepts Bill's bid and awards him the contract for the job,even though the city engineer is of the opinion the job cannot be done for less than $650,000.In this case:

• A)Bill must perform for the agreed upon price, because he has made a unilateral mistake.
• B)the city was aware of Bill's mistake. When it accepted the bid, with knowledge of Bill's mistake, the city sought to take an unconscionable advantage of Bill's error.
• C)there was a palpable unilateral mistake.
• D)Two of the above, (b) and (c).

Identify the substitution and output effects and their implications for firm decisions.

Understand the derived demand for labor and other resources.

Grasp the impact of technological and external factors on the demand and supply of resources.

Evaluate the impacts of resource productivity changes on firm output.

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Definitions:

Net Working Capital

Represents the difference between a company's current assets and current liabilities, indicating the liquidity of the business.

Pro Forma Statements

Financial statements that project the future financial performance of a company, based on certain assumptions.

Long-Term Debt

Debt with a maturity of more than one year, used to finance or capitalize lasting investments.

Recoveries of Net Working Capital

The process of reclaiming cash invested in net working capital components, such as accounts receivable, and reducing accounts payable.