Flora's Flowers bought a new van last year for $10,000.It can now sell the van for $8,500.To buy this year's model of the same van it would have to pay $11,000.What is the one-year amount of economic depreciation?
A)$2,500
B)$1,500
C)$1,000
D)$10,000
E)$3,500

Question

Quizplus · Accepted Answer

Economic depreciation is the decrease in value of an asset due to market factors, such as changes in supply and demand or technology. In this case, the van has decreased in value from $10,000 to $8,500, which is a decrease of $1,500 due to market factors. The fact that a new model is available for $11,000 is not relevant to economic depreciation.

Flora's Flowers Bought a New Van Last Year for $10,000