Externalities Exist Because

question 43

Multiple Choice

Externalities exist because

• A) owners of private property have an incentive to maintain their property.
• B) owners of private property have little incentive to protect their property.
• C) owners of private property are not able to trade with others.
• D) property rights are not clearly defined.
• E) there is too much private ownership of property.

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Definitions:

Depreciation Expense

Expense allocated for the reduction in value of tangible assets over their useful life for accounting and tax purposes.

Estimated Residual Value

The anticipated value of an asset at the end of its useful life.

Obsolescence

The process through which a product or technology becomes outdated and no longer used, often due to advancements or changes in consumer preferences.

Depletion

An accounting method used to allocate the cost of extracting natural resources, such as minerals or timber, from the earth, reflecting the consumption of the resource over time.