Olaf Was Injured in an Automobile Accident and Received $25,000

question 61

Multiple Choice

Olaf was injured in an automobile accident and received $25,000 for his physical injury, $50,000 for his loss of income, and $10,000 punitive damages. As a result of the award, the amount Olaf must include in gross income is:

• A) $10,000.
• B) $50,000.
• C) $60,000.
• D) $85,000.
• E) None of these.

---

Definitions:

Highly Inelastic

Describes a situation where supply or demand for a product or service is relatively unresponsive to changes in price.

Unit Elasticity

A situation where a change in the price of a good or service results in a proportional change in the quantity demanded or supplied.

Income Elasticity

A measure of how much the demand for a product changes in response to a change in consumers' income.

Demand

The total quantity of a good or service that consumers are willing and able to purchase at a given price level in a given market.