Molly Exchanges a Small Machine (Adjusted Basis of $85,000; Fair

question 14

Multiple Choice

Molly exchanges a small machine (adjusted basis of $85,000; fair market value of $78,000) used in her business and investment land (adjusted basis of $10,000; fair market value of $15,000) for a large machine (fair market value of $93,000) to be used in her business in a like-kind exchange. What is Molly's recognized gain or loss?

• A)$0
• B)$5,000
• C)($2,000)
• D)($7,000)
• E)None of the above

Understand the relationship between average costs, marginal costs, and total costs in different production levels.

Grasp the concept of economies and diseconomies of scale and their effects on long-run average total costs.

Explain the impact of changes in variable and fixed costs on a firm's cost curves.

Interpret graphical representations of cost concepts and scales of production.

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Definitions:

Mortgagees

Lenders or financial institutions that provide funds for a mortgage loan, holding the property as collateral until the loan is repaid.

Tenants

Individuals or entities that hold a leasehold interest in a property, granting them the right to occupy and use the property according to the terms of their lease agreement.

Assumes a Mortgage

The act of taking on the obligation to pay an existing mortgage, typically as part of a property purchase.

Latent Defects

Hidden or concealed flaws in property or goods that are not readily observable or discoverable through reasonable inspection.