Suppose Profits Are Less Than Zero

question 98

Multiple Choice

Suppose profits are less than zero. From this it follows that:

• A)aggregate income exceeds aggregate production.
• B)the sum of employee compensation, rents, and interest exceeds aggregate income.
• C)aggregate income is less than the value of final output.
• D)the sum of employee compensation, rents, and interest equals aggregate income.

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Definitions:

Useful Life

The expected period over which an asset is anticipated to be useful and productive for its intended purpose.

Residual Value

The estimated value that an asset will have at the end of its useful life, also known as salvage value.

Net Book Value

The value of an asset as recorded on the balance sheet, calculated as the original cost minus accumulated depreciation and impairments.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal annual amount.