Which of the Following Events Causes the Purchaser of an Option

question 72

Multiple Choice

Which of the following events causes the purchaser of an option to add its cost to the basis of the property to which the option relates?

• A)The option is exercised.
• B)The option is sold.
• C)The option lapses.
• D)The option is rescinded.
• E)None of these.

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, a critical concept for decision-making in production and pricing.

Marginal Revenue

The extra income a business earns by selling an additional unit of a product or service.

Profit-maximizing Firm

A business entity that aims to achieve the highest possible profit through its operations and decision-making, focusing on optimizing revenue and minimizing costs.

Marginal Revenue

The gain in income associated with the sale of one extra unit of a good or service.