Jenny Went to the Store and Asked to See an AM-FM

question 164

Multiple Choice

Jenny went to the store and asked to see an AM-FM clock radio with a tape deck. The salesman brought out a clock that he said had all the features that she wanted. After looking at the price tag and little else, she said she would think about it. The salesman said that this was the most popular model sold, that they sold 1000 of them during the World Series alone, that it had the highest rating in Consumer Reports, and that he only had that one left. Jenny bought it. Later she found out that all the statements made to her by the salesman were false, including the statement that the clock had all the features that she wanted, because it did not have an AM band. Which of the following is true?

• A) Jenny would only have a remedy for breach of contract namely, the clock did not have an AM band because none of the other statements was about the radio itself.
• B) The equitable remedy of rescission is available only if Jenny were able to restore the clock to the seller.
• C) The statements of the salesman are fraudulent only if the salesman knew they were false.
• D) Jenny could obtain the remedy of rescission only if the statements made to induce her to contract were fraudulent.
• E) Jenny could return this clock to the seller only if she could prove undue influence.

---

Definitions:

Break-Even Points

The production level or point in sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Shutdown Point

The level of operations where a company's revenue from goods or services sold just covers its variable costs, beyond which it becomes more cost-effective to halt production.

Short Run

A period in which at least one input, such as plant size or capital, is fixed and cannot be varied to change output levels.

Long Run

A time frame in economics where all inputs and costs are variable, allowing for full adjustment to changes.