What Would the Book Value Be at the End of Year

question 107

Multiple Choice

What would the book value be at the end of year 3 for a computer system using the straight-line method when cost is $5,000,residual value is $1,000,and the expected life is 4 years?

• A)$2,000
• B)$1,500
• C)$1,250
• D)$1,000

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Definitions:

Long-run Average Cost

The total cost per unit of output produced, when all input factors are variable, considered over a sufficient period.

Long-run Average Cost

The average cost per unit of output over a long period, where all inputs can be adjusted by firms. This includes the cost of changing production levels and entering or exiting an industry.

Economies of Scale

Economies of scale refer to the reduced costs per unit that businesses experience as their operation size increases, typically resulting in lower costs per unit as the scale expands.

Output Q₁

A specific quantity of goods or services produced, denoted as Q₁ to signify a particular level or point of production output.