A Resource That Earns Only Economic Rent

question 49

Multiple Choice

A resource that earns only economic rent

• A)cannot be employed in any other line of production, so its opportunity cost is zero
• B)is rental payment for a resource that has already been paid for
• C)is impossible because all resources have an opportunity cost associated with their use
• D)is not fixed in quantity
• E)has a perfectly elastic supply curve

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Definitions:

Indirect Method

A cash flow statement reporting approach that adjusts net income for changes in balance sheet accounts to calculate cash from operating activities.

Operating Activities

Activities related to the day-to-day functions of a business that involve generating revenue, paying expenses, and the net cash flow from these operations.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the loss of value over time.

Amortization

The process of spreading out a loan into a series of fixed payments over time, or the gradual reduction of the book value of an intangible asset over its useful life.