MrsSmith Is Moving Out of Her Personal Residence to a Smaller

question 39

Multiple Choice

Mrs.Smith is moving out of her personal residence to a smaller apartment.Because of this,she wishes to sell her piano.George inspects her piano and decides to buy it.Mrs.Smith receives her money and tells George he can take the piano right now.George says he needs to borrow his friend's truck before he can remove the piano.That night,the piano is destroyed by fire.George sues to recover his money.Which best describes this situation?

• A) Mrs. Smith wins; the risk of loss passed to George as soon as the contract was made.
• B) Mrs. Smith wins; the risk of loss passed to George when Mrs. Smith said he could take the piano.
• C) George wins; the risk of loss does not pass until George takes delivery of the piano.
• D) George wins; the risk of loss does not pass until George receives a negotiable warehouse receipt.
• E) George wins; the risk of loss stays on Mrs. Smith because the goods were not conforming.

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Definitions:

Pareto Efficient Allocation

An economic state where resources are allocated in such a way that it is impossible to make one individual better off without making at least one individual worse off.

Strictly Convex Preferences

Preferences that demonstrate a consumer's increasing marginal rate of substitution, indicating a strong preference for diversified bundles of goods over homogeneous bundles.

Indifference Curves

Graphs representing different bundles of goods between which a consumer is indifferent, showing the combinations of goods that provide the same level of utility to the consumer.

Marginal Utility

The additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.