In Which of the Following Situations Would a Negative Externality

question 139

Multiple Choice

In which of the following situations would a negative externality most likely be involved?

• A)It is night and Kenneth is sitting in his easy chair reading a novel by John Grisham.The lamp he is reading by has only a 40-watt light bulb.He is having a hard time reading.
• B)Alyson lives near an airport.At five o'clock in the morning every day she can hear the airplanes taking off and it awakens her.
• C)Lucy went to a fancy restaurant last night and ordered the most expensive meal on the menu.She hated it.
• D)Richard is taking an economics class from Professor Franklin.Professor Franklin often says things that confuse Richard.

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Definitions:

Reversals of Revaluation

An accounting process that negates a previously recorded increase or decrease in the value of an asset to reflect its current market value.

Accumulated Depreciation

The total amount of depreciation expense recorded for an asset over its useful life, reducing its book value on the balance sheet.

Fully Depreciated

Fully Depreciated refers to an asset that has reached the end of its useful life, and its book value is equal to its salvage value in the financial records.

Double Diminishing-Balance

A method of accelerated depreciation which charges depreciation at a higher rate in the early years of an asset's life.