Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 21

Multiple Choice

Priscella pursued a hobby of making bedspreads in her spare time.Her AGI before considering the hobby is $40,000.During the year she sold the bedspreads for $10,000.She incurred expenses as follows:
Supplies
$4,000
Interest on loan to get business started
500
Advertising
6,500
​
Assuming that the activity is deemed a hobby,how should she report these items on her tax return?

• A)Include $10,000 in income and deduct $11,000 for AGI.
• B)Ignore both income and expenses since hobby losses are disallowed.
• C)Include $10,000 in income,deduct nothing for AGI,and claim $11,000 of the expenses as itemized deductions.
• D)Include $10,000 in income and deduct interest of $500 for AGI.
• E)None of the above.

Calculate specific cost measures (MC, ATC, AVC, AFC) given appropriate data.

Analyze the effects of changes in production levels on different cost measures.

Evaluate the impact of technological advances and changes in input prices on cost curves.

Determine profit-maximizing output levels using cost data.

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Definitions:

Lifespan Human Development

The study of how people change and stay the same over the course of their life, from conception to death.

Current Cohort

The group of individuals sharing a common characteristic, typically being observed or studied within a specified time frame.

Generation

A group of individuals born and living at about the same time, regarded collectively.

Lifespan Human Development

The study of how people grow, change, and stay the same throughout their entire life, from conception to death.