Pam Recently Was Sickened by Eating Spoiled Peanut Butter

question 32

Multiple Choice

Pam recently was sickened by eating spoiled peanut butter. She successfully sued the manufacturer for her medical bills ($3,700) , her emotional distress ($6,000-she now fears peanut butter) , and punitive damages ($44,000) . What amount must Pam include in her gross income?

• A)$44,000
• B)$50,000
• C)$47,700
• D)$9,700
• E)$0-none of these benefits are included in gross income.

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Definitions:

Supply Curve

A graph that shows the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Equilibrium Price

The price at which the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to a balance in the market.

Demand Schedule

A chart indicating the amount of a product or service buyers are prepared and capable of buying at different price levels.

Shortage/Surplus

A state in the marketplace where the demand for a good surpasses its supply, causing a shortage, or where the supply of a product outpaces its demand, resulting in a surplus.