Courtney Sells a Cottage at the Lake That the Family

question 242

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

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Definitions:

Efficient Level

An optimal state of allocation of resources where any changes might lead to a decrease in efficiency or utility.

Upward Sloping

Describes a line or curve on a graph that moves higher as it goes from left to right, indicating a positive relationship between two variables.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

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