If External Costs Are Included and Added to a Firm's

question 37

Multiple Choice

If external costs are included and added to a firm's private costs, then

• A) the demand curve will shift to the right.
• B) the demand curve will shift to the left.
• C) the supply curve will shift to the right.
• D) the supply curve will shift to the left.

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Definitions:

Double-Declining-Balance Method

A method of accelerated depreciation where an asset's book value is reduced at double the rate of straight-line depreciation.

Useful Life

The estimated duration of time a fixed asset is expected to be economically usable by an entity.

Straight-Line Method

This is a depreciation method where an equal amount of the asset's cost is allocated as an expense each year over its useful life.

Salvage Value

The expected residual cost of an asset by the end of its functional life.