Under Which of the Following Circumstances Would an Asset Be

question 59

Multiple Choice

Under which of the following circumstances would an asset be considered impaired?

• A) A costly piece of diagnostic equipment at a city hospital is no longer used because new technology exists that does a better job.
• B) A bridge is damaged by an earthquake.
• C) An expansion project at the city airport is halted because a major airline stops service to the city.
• D) All of the above.

Understand the role and implications of coinsurance, pro rata, and other clauses in managing and distributing insurance losses.

Recognize the requirements and conditions for insurable interest in property and life insurance policies.

Identify conditions under which policy reformation or adjustments occur due to misunderstanding or omissions.

Understand the circumstances under which insurers are obligated to pay or deny claims and the implications for policyholders.

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Definitions:

Short-Run Supply

The supply of goods that varies with changes in price in the short term, where at least one factor of production is fixed.

Average Variable Cost

The total variable costs divided by the quantity of output produced, indicating the average cost of production per unit when fixed costs are excluded.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service.

Shut Down

A short-term decision by a firm to cease operations when variable costs exceed revenues, typically in a perfect competition scenario.