If a machine has no physical wear but its value falls due to new technology, what is this called?
Answer and explanation
Correct answer: Depreciation due to obsolescence
Technological obsolescence is a form of depreciation in which newer technology makes an existing machine less useful, less efficient, or less competitive. Physical wear is not required; a working machine can lose economic value for this reason. Consumption expenditure and wage loss describe other economic items and do not explain the fall in the machine’s capital value.
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What is the correct answer to this question?
Depreciation due to obsolescence
Why is this the correct answer?
Technological obsolescence is a form of depreciation in which newer technology makes an existing machine less useful, less efficient, or less competitive. Physical wear is not required; a working machine can lose economic value for this reason. Consumption expenditure and wage loss describe other economic items and do not explain the fall in the machine’s capital value.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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