Sarah exchanges a building and land (used in her business) for Tyler’s land and building and some equipment (used in his busines
s). The assets have the following characteristics. Adjusted Basis Fair Market Value Sarah’s real property $120,000 $300,000 Tyler’s real property 60,000 220,000 Equipment 50,000 80,000 What are Sarah’s recognized gain or loss and basis for the land and building and equipment acquired from Tyler
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Answer:
21
Explanation:
Given that:
The utility function U(x, y) =
The budget line income is:
105=4x +3y
The equation MRTS is:
where;
and:
∴
Using the equation MRTS:
4x = 12y
x = 12y/4
x = 3y
Replacing the value of x into the budget line income, we have:
105 = 4x + 3y
105 = 4(3y) + 3y
105 = 12y + 3y
105 = 15y
y = 105/15
y = 7
Then, from x = 3y
x = 3(7)
x = 21
Thus, she will consume 21 gapefruits