When a Firm Is Able to Put Idle Equipment to Use

question 459

Multiple Choice

When a firm is able to put idle equipment to use by hiring another worker,

• A)variable costs will rise.
• B)variable costs will fall.
• C)fixed costs will fall.
• D)both fixed costs and variable costs will rise.

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Definitions:

Indefinite Life

Refers to assets that do not have a foreseeable end to their useful life, often applicable to intangible assets like trademarks.

Intangible Asset

An asset that lacks physical substance and is not financial in nature, such as patents, trademarks, and copyrights.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing non-physical assets like brand reputation and customer loyalty.

Book Value Decrease

A reduction in the book value of an asset, often due to depreciation, impairment, or disposal.