Fact Pattern 28-1B (Questions B8 and B9 Apply)

question 13

Multiple Choice

Fact Pattern 28-1B (Questions B8 and B9 apply)
Dana takes her car to Efficient Auto Repair Service, which repairs the car and bills Dana for $500. She writes out a check drawn on First Choice Bank, but later, believing that Efficient Auto did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 28-1B. If First Choice pays the check, the bank

• A) can sue Dana for a wrongful stop-payment order.
• B) can sue Efficient Auto for breach of contract.
• C) is liable to Efficient Auto for the time and trouble to return the payment.
• D) is liable for Dana's loss due to the wrongful payment.

Understand the concept of Pareto efficiency and how externalities impact market efficiency.

Recognize the role of authorities and regulatory bodies in mitigating negative externalities to improve welfare.

Identify and analyze the externalities in various market situations, including common resources and public goods.

Understand the importance of property rights and how their allocation affects market outcomes and distribution.

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Definitions:

U-bolts

Curved bolts shaped like the letter "U" with threaded ends, used to clamp components together, often in automotive or structural applications.

Centerbolt

A central bolt typically used in securing a component or assembly in place, often seen in applications like vehicle suspension systems.

Multi-leaf Spring

A type of suspension spring consisting of several layers of metal leaves stacked together to provide support and absorb shocks.

Equalizing-beam Suspension

A type of vehicle suspension system that uses a central beam to distribute weight and balance between axles.