Fact Pattern 37-2A (Questions A9-A10 Apply)

question 39

Multiple Choice

Fact Pattern 37-2A (Questions A9-A10 apply)
Luann and Mace are partners in Networx,a computer peripherals firm.
-Refer to Fact Pattern 37-2A.Luann signs a contract with Oleo Chips,a retail component supplier,apparently on Networx's behalf.The contract is binding on

• A)Luann,Mace,and Networx.
• B)Luann only.
• C)Networx only.
• D)Oleo only.

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Definitions:

Increasing-Cost Industry

An industry in which the costs of production increase as the industry grows and decreases as it contracts.

Resource Prices

The costs associated with acquiring inputs used in the production process, such as labor, materials, and capital.

Industry Expands

The process of growth within a particular sector or industry, marked by increased production, innovation, and possibly the entrance of new firms.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing the excess return over the firm's opportunity costs.