Fact Pattern 15-1

question 17

Multiple Choice

Fact Pattern 15-1
Bella Homes enters into a contract to buy 132 acres from Watershed Holdings to subdivide and sell in fifth-acre lots for Pristine Meadow, a residential development.
-Refer to Fact Pattern 15-1. If Watershed breaches the contract, Bella's remedy would most likely be

• A) a certain ratio of the amount that Watershed has in liquidated funds.
• B) a percentage of Watershed's unrealized profit.
• C) the difference between the land's contract and market prices.
• D) specific performance.

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Definitions:

Negative Externality

Occurs when a decision by an individual or firm results in unwanted negative effects on another party not involved in the decision.

MSC (Marginal Social Cost)

The total cost to society of producing an additional unit of a good or service, including both private costs and any externalities.

Positive Externality

A benefit received by individuals or society at large from an economic transaction in which they were not directly involved.

Vaccinating

The act of administering a vaccine to help the immune system develop protection from a disease.