Use the Following Scenario to Answer the Questions That Follow

question 65

Multiple Choice

Use the following scenario to answer the questions that follow.
An economy has two workers, Smith and Ricardo. Every day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones.
-What is the opportunity cost for Smith to produce one computer?

• A) 1/4 smartphone
• B) 1/2 smartphone
• C) 1 smartphone
• D) 2 smartphones
• E) 4 smartphones

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Definitions:

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation in the United States that allows businesses to recover investments in certain property through tax deductions over a specified life.

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life; often used in depreciation calculations.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or other declines in value.

Depreciable Rate

The rate at which an asset loses its value over time for accounting and tax purposes, determining its annual depreciation.