Depreciation

question 10

Multiple Choice

Depreciation:

• A) is not an allowance for the consumption of capital.
• B) is not a legitimate cash flow.
• C) does not act as a tax shield.
• D) does not consider the salvage value of an item.

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Definitions:

LRAC Curve

Long-Run Average Cost Curve, showing the lowest average cost at which a firm can produce any given level of output in the long term.

Natural Monopolist

A type of monopoly that occurs when a single firm can supply a product or service to an entire market at a lower cost than two or more firms could.

Market Demand Curve

A graphical representation that shows the relationship between the price of a good and the total quantity demanded by all consumers in the market.

Barrier To Entry

Factors that make it difficult for new firms to enter a market, such as high initial costs or stringent regulations.