Suppose That a Highway Is Governed by a Use Fee

question 51

Multiple Choice

Suppose that a highway is governed by a use fee charged to motorists that is based on congestion, operation and maintenance. The total traffic t is used to determine the cost of 5t² + 7t. What is the average cost per motorist?

• A) 12
• B) 5t + 7
• C) 10
• D) 10t + 7

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Definitions:

Cost Depletion

An accounting method used to allocate the cost of extracting natural resources, such as minerals or timber, over the period of extraction.

Permanent Difference

Differences between accounting income and taxable income that will not reverse in future periods.

Book Income

The income reported by a company according to accounting principles, often different from taxable income due to timing and valuation differences.

Taxable Income

The amount of income that is used to calculate an individual or a company's income tax liabilities.