George Contracted with Bob to Have a Racing Bike Modified

question 20

Multiple Choice

George contracted with Bob to have a racing bike modified for him to be delivered on February 20, 2011, for a race on February 22. The price for the modification was agreed on $100. About February 10, George became nervous about the bike being finished on time and went to see Bob. Bob said that he was very busy, but if he really wanted to be sure that it would be finished on time, George would have to pay him an extra $25 so he could pay his employees overtime. George agreed and Bob completed the modifications as requested, on time. How much does George legally owe?

• A) Only $100 because Bob had an existing duty to modify the bike and the price was settled.
• B) $25 because past consideration is no consideration.
• C) A reasonable amount only.
• D) $100 plus whatever it cost for the overtime.
• E) $125 because Bob gave consideration for George's promise to pay the additional $25.

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Definitions:

ATC Curve

The Average Total Cost curve, it represents the per-unit total cost of production (fixed plus variable costs divided by total output) at various levels of output.

Short Run

In economics, the short run is a period during which at least one input, such as factory size or machinery, is fixed and cannot be changed.

Long Run

A period of time in which all factors in a production process can be varied, allowing for the adjustment to changes in market or economic conditions.

Economic Power

The ability of an entity or country to influence or control economic activities, including production, trade, and consumption.