A Clothing Store That Has Opened a Credit Account with Judy,a

question 30

Multiple Choice

A clothing store that has opened a credit account with Judy,a college student,gets Judy's older sister Alice to agree to pay the amount owed on the account if Judy fails to do so.Which of the following statements is true for this scenario?

• A)Judy is the obligor and only she is contractually liable to the clothing store.
• B)Alice is the guarantor and she is primarily liable to make the payments.
• C)Judy is the obligor and her promise to the clothing store is conditional.
• D)Alice is the guarantor and Alice's contract must be in writing to be enforceable.

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Definitions:

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probability of outcomes is known.

Marginal Disutility

The added dissatisfaction or inconvenience experienced by consuming one more unit of a good or service.

Marginal Utility

The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.

Absolute Terms

A method of expression or measurement that is independent of other variables or comparisons, focusing on intrinsic values.