All Contracts Are Agreements, but Not All Agreements Are Contracts

question 14

Multiple Choice

All contracts are agreements, but not all agreements are contracts. The PRIMARY reason is that:

• A) certain agreements cannot be enforced by law.
• B) certain agreements cannot be licensed under law.
• C) agreements do not fall under any classification of contracts.
• D) terms of an agreement usually are different from those of a contract.

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Definitions:

Utility Maximization

The process by which individuals allocate their resources to maximize their satisfaction or utility.

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person gains from consuming one more unit of the product.

Additional Utils

The extra satisfaction or utility a consumer receives from consuming one more unit of a good or service.

Optimal Consumption

The mix of goods and services purchased that maximizes the utility or satisfaction of a consumer given their budget constraint.