Abigail's Hobby Is Sculpting

question 125

Multiple Choice

Abigail's hobby is sculpting.During the current year,Abigail sold three of her sculptures for a total of $3,200.Her related expenses include $1,500 in utilities,$1,200 in supplies and $900 in depreciation.Of the total expenses incurred,Abigail may deduct

• A)$0.
• B)$1,500 in utilities and $1,200 in supplies.
• C)$1,500 in utilities,$1,200 in supplies,and $500 in depreciation.
• D)$1,500 in utilities,$1,200 in supplies and $900 in depreciation.

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Definitions:

Efficiency Loss

Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. Also called deadweight loss.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Actual Production

The quantity of goods or services produced by a firm, industry, or economy within a specific period, factual and not estimated.

Consumer Surplus

The variance between what consumers are ready and capable of spending on a product or service and the actual sum they end up paying.