Apricot Corporation distributes property ($125,000 basis and $150,000 fair market value) to its sole shareholder, Ellie. The pro
perty is subject to a liability of $200,000, which Ellie assumes. Apricot has E & P of $325,000 prior to the distribution. a)What gain, if any, does Apricot recognize on the distribution? What is Apricot’s accumulated E & P at the start of the following year? b. What is the amount of Ellie’s dividend income on the distribution? What is her basis in the property received?
1 answer:
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Answer:
no surplus or shortage
Explanation:
Equilibrium price is the price at which quantity demand equal quantity supplied. Above equilibrium price there is a surplus - quantity supplied exceeds quantity demanded.
Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied
If demamd increases by 100, new equilibrium is 40
Thus, ceiling price equal equilibrium
Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.
Effects of a binding price ceiling
It leads to shortages
it leads to the development of black markets
it prevents producers from raising price beyond a certain price
It lowers the price consumers pay for a product. This increases consumer surplus
