Jack, Aaron and Katie Have a New Television, Which Has

question 130

Multiple Choice

Jack, Aaron and Katie have a new television, which has stopped working.For a long time, no one takes the television to be fixed.Why might this have occurred?

• A)The television is considered a private good but they can't remember who it belongs to
• B)The television is considered a public good and they are each worried the others will free ride if they pay the repair fee
• C)The television is considered a common resource and they are worried it will break again from being used too much
• D)The television is considered a club good and they are worried about the negative externality from watching too much television

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life, reflecting what a company expects to recover, less disposal costs, once an asset is no longer needed for business operations.

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Net Equipment Capital Cost

The total cost of acquiring equipment for business operations, minus any salvage value or depreciation.

Increased Working Capital

Refers to an uptick in the company's current assets minus its current liabilities, indicating improved short-term financial health.