Several Factors Are Used to Determine Whether an Activity Is

question 164

Multiple Choice

Several factors are used to determine whether an activity is classified as a hobby or as a business. Which of the following are factors that aid in this determination?
I.The financial status of the taxpayer
II.The expectation that the assets involved in the activity will increase in value.
III.The taxpayer's success in similar activities.
IV.The amount of personal pleasure and enjoyment that accrues to the taxpayer.
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• A)Only statements II, III, and IV are correct.
• B)Only statement III is correct.
• C)Statements I, II, and III are correct.
• D)Only statement IV is correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Efficient Level

A point at which resources are allocated in the most effective manner, maximizing output without wasting resources.

Excludable

A characteristic of a good or service that allows its owner to prevent others from using it without permission.

Nonrival

A characteristic of a good whereby one person's consumption does not diminish the availability of the good for consumption by others.

Marginal Social Cost

The additional cost incurred by society as a whole due to the production of one extra unit of a good or service.