An Average Consumer's Decision to Purchase a Good from a Firm

question 67

Multiple Choice

An average consumer's decision to purchase a good from a firm or hire resources directly in the market will _____

• A)depend only on his production skills and not on his contract negotiation skills.
• B)depend only on the opportunity cost of his time but not on his skills.
• C)not depend on the cost of identifying, measuring, and pricing inputs.
• D)not depend on the cost of negotiating contracts.
• E)depend, in part, on both his skills and the opportunity cost of his time.

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Definitions:

Preexisting Duty Rule

A legal principle stating that an existing contractual obligation cannot serve as consideration for a new contract.

Bilateral Contract

A bilateral contract is a mutually binding agreement in which each party makes a promise to the other, such as a promise to perform a service in exchange for payment.

Illusory Promise

Describes a statement or agreement that appears to be a promise but is too vague or has terms that allow the promisor to avoid any real obligation.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.