Suppose That a Firm Plans to Provide Defense Against Asteroids

question 61

Multiple Choice

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

• A) Most people will find it in their self-interest to pay the firm to protect the earth.
• B) Asteroid protection is a private good, so the firm will make a lot of profit.
• C) In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense.
• D) Most people will not pay a firm for asteroid defense.

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Definitions:

Salvage Value

Salvage value is the estimated residual value of an asset at the end of its useful life, determining how much it can be sold for or disposed of.

Double-Declining-Balance Depreciation

An accelerated depreciation method that doubles the depreciation rate of an asset, causing it to lose value quicker than under traditional linear depreciation methods.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.

Natural Resources

Substances like minerals, forests, water, and fertile land that are found in nature and can be utilized for economic benefits.