As Economists Use the Term, Depreciation Is

question 55

Multiple Choice

As economists use the term, depreciation is

• A) cashing in a Treasury bond to purchase a sailboat.
• B) selling your Microsoft stock so you can purchase Google stock.
• C) a firm increasing inventory prior to the holiday season.
• D) a CPA's knowledge of the 2015 tax code in the years after 2015.

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Definitions:

Economic Profits

The surplus that remains after all operational costs, including opportunity costs, are subtracted from total revenues.

Economic Profits

Economic Profits represent the surplus after subtracting both the explicit and implicit costs from total revenue, depicting a firm's advantage beyond the normal returns.

Normal Rate

Typically refers to an average or commonly occurring value within a specific context, such as an interest rate or growth rate.

Marginal Cost

The increase or decrease in the total cost that arises when the quantity produced is incremented by one unit.