If a Technological Improvement Took Place in the Computer Industry

question 35

Multiple Choice

If a technological improvement took place in the computer industry, we would expect to see the equilibrium price of computers to

• A)increase and the quantity of computers sold to decrease.
• B)decrease and the quantity of computers sold to increase.
• C)decrease and the quantity of computers sold to decrease.
• D)increase and the quantity of computers sold to increase.
• E)increase and the quantity of computers sold to stay the same.

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Definitions:

Gain of $2,000

Represents an increase in wealth or resources, typically accounted for in financial statements when an asset is sold for more than its cost.

Estimated Useful Life

The expected period during which an asset is predicted to be usable for the purpose it was acquired.

Depreciation Expense

An accounting method to allocate the cost of a tangible asset over its useful life to represent wear and tear over time.

Straight-Line Method

A method of calculating depreciation that spreads the cost of an asset evenly over its useful life.