Badger and Fox Are Forming a Partnership

question 10

Multiple Choice

Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invests $100,000 in cash and equipment that has a market value of $75,000. For the partnership, the amounts recorded for the building and for Badger's Capital account are:

• A) Building $350,000; Badger, Capital $350,000.
• B) Building $225,000; Badger, Capital $225,000.
• C) Building $225,000; Badger, Capital $125,000.
• D) Building $350,000; Badger, Capital $225,000.
• E) Building $350,000; Badger, Capital $300,000.

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Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a production input, keeping other inputs constant.

AVC

Average Variable Cost, which is the total variable costs divided by the quantity of output produced.

ATC

A restated definition for Average Total Cost; it implies the cost per unit produced when both fixed and variable costs are accounted for across all levels of output.

AFC

Average Fixed Cost, which is the fixed costs of production spread out over the number of units produced, declining as production increases.