If a Producer Is Not Able to Expand Its Plant

question 201

Multiple Choice

If a producer is not able to expand its plant capacity immediately, it is

• A)bankrupt.
• B)operating in the long run.
• C)operating in the short run.
• D)losing money.

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Definitions:

Double-Declining-Balance

An accelerated method of depreciation that doubles the rate at which an asset's book value declines compared to the straight-line method.

Salvage Value

The calculated resale worth of an asset at the close of its efficient lifespan.

Depreciation

The allocation process of a tangible asset's cost over the period it is useful.

Double-Declining-Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the value of an asset more quickly in its early years.