A and E Are a Married Couple Living in a Community

question 11

Multiple Choice

A and E are a married couple living in a community property state.E owned an apple orchard in which she had a basis of $70,000.She sold the orchard to A last year for its fair market value of $100,000.They remain happily married.What gain did E recognize on the sale?

• A)$0
• B)$30,000
• C)$70,000
• D)$100,000

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Definitions:

Perfectly Elastic

A situation in a market where the quantity demanded or supplied responds infinitely or disproportionately to changes in price.

Cross Elasticity

A measure of how the quantity demanded of one good or service changes in response to a change in the price of another good or service.

Complementary

Goods or services that are used together, where an increase in demand for one leads to an increase in demand for the other.

Income Elasticity

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