Land Was Originally Purchased for $20,000

question 3

Multiple Choice

Land was originally purchased for $20,000.It is sold for $20,000 in cash.How does the sale affect the accounting equation?

• A) Assets increase $20,000; liabilities decrease $20,000.
• B) Assets increase $20,000; liabilities increase $20,000.
• C) Assets increase $20,000; owner's equity increases $20,000.
• D) Assets increase $20,000; assets decrease $20,000.

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Definitions:

Allocative Efficiency

A state of the economy in which production represents consumer preferences and goods and services are distributed optimally according to the needs and desires of society.

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the actual amount they spend, indicating the advantage to consumers.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, measuring the benefit to producers from participating in the market.

Marginal Benefit

The extra value or enjoyment gained by using one more unit of a certain good or service.