You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven?
A) Expense the oven, taking a write-off for the entire price in the first year.
B) Amortize the cost over the 10 year life of the oven, resulting in a cost of $1,500 per year.
C) Calculate the value of renting the oven to someone else and use that as your cost.
D) The cost is the price of the oven minus any revenue made selling pizzas made in the oven.
C
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Roger spends all of his money on racquetballs and food. What would happen to Roger's budget line if his income increased by 10 percent, holding prices constant?
a. It would shift inward. b. It would rotate about the axis for food. c. It would rotate about the axis for racquetballs. d. Nothing would happen to the budget line, because the relative prices for food and racquetballs have not changed. e. It would shift outward.
Suppose that a college professor is creating an exam in her university office. Which of the following would be an example of a factor of production used by the professor? (i) the professor's time (ii) a computer software program into which the professor types the exam questions (iii) the physical space of the professors office where she works when creating the exam (iv) the interest on the
professor's home mortgage a. (i) only b. (i) and (ii) only c. (i), (ii), and (iii) only d. (i), (ii), (iii), and (iv)