Which of the Following Is Likely to Cause Market Failure

question 73

Multiple Choice

Which of the following is likely to cause market failure and be undersupplied?

• A) Research
• B) Orange juice
• C) River water
• D) Grazing pasture

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time due to use and wear.

Long-Lived Asset

Assets with a useful life extending beyond one year, typically including property, plant, and equipment, and used in the operation of a business.

Productive Life

The expected period during which an asset is able to provide economic benefits or contribute to revenue generation.

Ordinary Repairs

Ordinary repairs are routine maintenance expenses undertaken to maintain the efficiency and operating condition of an asset but do not significantly extend its life.