Which of the Following Is True Regarding Depreciation Recapture

question 36

Multiple Choice

Which of the following is true regarding depreciation recapture?

• A) Changes the character of a loss.
• B) Changes the character of a gain.
• C) Changes the amount of a gain.
• D) Only applies to ordinary assets.
• E) None of these.

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Definitions:

Marginal Product

The increase in output that results from employing one more unit of a particular input, holding all other inputs constant.

Explicit Costs

Direct, out-of-pocket expenses paid by firms for inputs to production, such as wages, rent, and materials, as opposed to implicit costs which are not directly paid out in cash.

Implicit Costs

The opportunity costs that are not directly paid for or incurred during the production of a good or service.

Average Total Cost

The complete expenditure of manufacturing (incorporating steady and fluctuating expenses) divided by the aggregate volume of goods produced.