Identify the Legally Insufficient Consideration

question 22

Multiple Choice

Identify the legally insufficient consideration.

• A) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens suit, to which Alex promises to pay just $100 in exchange for Tom's promise to release him from the remainder of the amount.
• B) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens to sue him, to which Alex promises to pay an interest of 2 percent whenever he gets his debtors to repay him.
• C) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 1, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount.
• D) Alex promised to pay $1,000 to Tom for his car, due March 1. On February 27, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount.
• E) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 18, Tom pays only $400 and takes Alex to the carnival.

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Definitions:

Average Cost Curve

A graphical representation showing how the average cost per unit of output varies with the level of output.

Marginal Cost Curve

A graphical representation showing how the marginal cost changes with changes in production volume.

Average Variable Cost Curve

A graphical representation showing how the average variable cost (AVC) of production changes with the level of output.

Marginal Cost

The cost added by producing one extra item of a product, essentially the change in total cost that arises when the quantity produced changes by one unit.