Recently, a woman named Mary Krawiec attended an auction in Troy, New York. At the auction, a bank was seeking to sell a foreclosed property: a large Victorian house suffering from years of neglect in a neighborhood in which many properties had been on the market for years yet remained unsold. Her $10 offer was the highest bid in the auction, and she handed over a $10 bill for a title to ownership. Once she acquired the house, however, she became responsible for all taxes on the property amounting to $4,500 and for an overdue water bill of $2,000. In addition, to make the house habitable, she and her husband devoted months of time and unpaid labor to renovating the property. In the process, they incurred explicit expenses totaling $63,792.

a. Calculate Mary Krawiec's explicit cost.

b. Mary Krawiec's total cost is ___ her explicit cost.

c. If the bank were to own the property, its total costs were likely to be ____ Mary Krawiec's explicit cost.

d. The bank was willing to sell the house at auction to Ms. Krawiec for only $10 because if the bank paid to renovate the property, paid the back taxes, and paid the overdue water bill,

Answer rating: 100% (QA)

a Mary Krawiecs explicit costs are equal to her Ex... View the full answer