Answer:
The correct answer is letter "C": cannot sue Karen for the warranty of merchantability because Karen is not a merchant.
Explanation:
A warranty of merchantability is an implied unwritten and unspoken warranty stating that consumers of products are to give use and care of those goods according to the purpose of what the product was made and that the good must meet an average quality and value compared to similar products. If the product has failures, the consumer could suit the merchant for providing a good that does not meet with its inherent benefits.
Thus, as Lydia bought the stair-step exerciser from Karen, she cannot sue Karen under warranty of merchantability after it fell apart since Karen is not a merchant.