Final answer:
The statement is true; equity does represent the owner's claim on economic resources after debts and liabilities. Owner's equity increases as the value of the asset appreciates and as mortgage debt is paid down, exemplified in the growth of equity in homeownership.
Step-by-step explanation:
The statement that economic resources to which the owner has a claim are represented by equity is True. Owner's equity in assets like houses is a clear example of this concept.
For instance, if a homeowner purchases a property for $200,000 and makes a 10% down payment, taking a bank loan for the rest ($180,000), over time as they pay off the loan and the property's market value increases, their equity in the house grows. Suppose the house's value increases to $250,000 and the homeowner has paid off the loan such that only $100,000 remains, their equity would be $250,000 (the property's current market value) minus the $100,000 (remaining loan amount), which equals $150,000. This reflects the owner's economic resources from the investment in the house.
Equity is significant as it represents the owner's claim on assets after all debts and liabilities have been settled, and for many, especially in the real estate market, it can be the single greatest financial asset.