Abby Owns a Condominium in the Great Smokey Mountains

question 935

Multiple Choice

Abby owns a condominium in the Great Smokey Mountains. During the year, Abby uses the condo a total of 21 days. The condo is also rented to tourists for a total of 79 days and generates rental income of $12,500. Abby incurs the following expenses: Using the IRS method of allocating expenses, the amount of depreciation that Abby may take with respect to the property will be

• A) $10,000.
• B) $8,515.
• C) $5,074.
• D) $7,900.

---

Definitions:

Price Taker

An entity (often a company or individual) that has no control to dictate prices for goods or services in the market and must accept the prevailing market price.

Maximum Profit

The highest possible financial gain that a business can achieve from its operations over a specific period.

Natural Monopolies

Situations where a single firm can supply a good or service to an entire market at a lower cost than could multiple firms.

ATC

Average Total Cost, which is the sum of all production costs divided by the quantity of output produced, incorporating both fixed and variable costs.