Which of the Following Statements Is/are Correct

question 151

Multiple Choice

Which of the following statements is/are correct?
I.Belle is retired. Her only sources of income are her $1,500 per month pension and $12,000 of Social Security benefits. Belle must include $6,000 of the Social Security benefits in her gross income.
II.Eileen and Daren divorce during the current year. Per the divorce agreement, Daren is to receive alimony of $600 per month, $400 per month for child support, and the family house that is valued at $200,000. Daren must recognize $600 per month as income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

Examine how economic incentives influence individual decisions in the presence of asymmetric information.

Infer the role of appraisals in mitigating the effects of adverse selection.

Understand the concept of Pareto optimality in the context of public goods and marginal rates of substitution.

Apply economic theory to calculate socially efficient levels of production taking into account external costs.

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Definitions:

Unilateral Mistake

A situation in contract law where only one party holds an incorrect belief about a basic assumption on which a contract is based, potentially affecting the enforceability of the contract.

Mutual Mistake

A situation in a contract where all parties involved have a common but erroneous belief regarding a vital fact about the contract terms.

Valid Contract

An agreement that meets all legal requirements, including offer, acceptance, consideration, and the intention to create a legal relationship, thereby enforceable by law.

Courts

Institutions that administer justice through the interpretation and application of laws.