Courtney Sells a Cottage at the Lake That the Family

question 106

Multiple Choice

Courtney sells a cottage at the lake that the family had used for their summer vacations.The purchaser paid Courtney $100,000 and assumed the mortgage which had a principal balance of $50,000.Courtney had purchased the cottage five years ago for $170,000.Courtney will recognize

• A)a gain of $20,000.
• B)no gain or loss.
• C)a loss of $70,000.
• D)a loss of $20,000.

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Definitions:

Economically Efficient Outcome

A situation where resources are allocated in a way that maximizes the net benefit to society or minimizes wastage.

Market Demand Curve

Graphical representation of the total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.

Negative Externalities

Unintended adverse effects or costs imposed on a third party or the environment as a result of an economic activity.