Carlotta Finds a Chest Inscribed "Sinbad" That Contains $250,000 of Cash

question 58

Multiple Choice

Carlotta finds a chest inscribed "Sinbad" that contains $250,000 of cash while diving among the coral reefs off the Virgin Islands. The US Customs and the DEA deny knowledge of the cash, so Carlotta keeps it.
I.Carlotta would not recognize any gross income if the chest contained jewels valued at $250,000, rather than the cash.
II.Recognition is necessary because Carlotta has an increase in wealth.
III.Recognition will not occur because the windfall would not be considered as derived from capital or from labor.
IV.The All-inclusive Income Concept explains the recognition of the cash as income.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Only statements I and IV are correct.
• D)Only statements I, II, and IV are correct.
• E)Only statements II, III, and IV are correct.

---

Definitions:

Market Price

The price at which a good or service is offered in the marketplace.

Differentiated Products

Products that are distinguished from similar products by unique characteristics, branding, or quality, allowing companies to compete beyond price.

Perfectly Competitive

A descriptor of a market scenario where firms face many competitors, sell identical products, and have no control over the market price, leading to optimal efficiency and resource allocation.

Short Run

A time period in which at least one input, like plant size, is fixed and cannot be changed by the firm.