A Owns a Ranch in Wyoming, Which B Offers to Purchase

question 10

Multiple Choice

A owns a ranch in Wyoming, which B offers to purchase. A is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana. The complex is available for sale. B purchases the apartment complex in Louisiana from C and transfers it to A in exchange for A's ranch. The ranch and the complex each have a $1,000,000 fair market value. Which of the following is true?

• A) The transaction qualifies as a like- kind exchange for both B and A.
• B) The transaction qualifies as a like- kind exchange for B but not for A.
• C) The transaction qualifies as a like- kind exchange for A but not for B.
• D) The transaction does not qualify as a like- kind exchange for either B or A.

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Definitions:

Output Effect

The change in total output resulting from a change in the quantity of an input, other factors being held constant.

Substitute Resource

An alternative resource that can be used in place of another to produce similar goods or services.

Marginal Product Curve

A graph that displays the change in output that results from employing an additional unit of a particular input, holding all other inputs constant.

Money Wage Rate

The nominal rate of compensation employees receive for their labor per unit of time, not adjusted for inflation.