Abstract The article states that the economic theory is not a monolithic structure. A liberal use of assumptions has provided the base upon which the traditional theory of the static, profit maximizing firm has been constructed. Since the rent, taxes, and insurance associated with productive facilities are obviously independent of volume, the author suggests to single out depreciation of plant and equipment for further investigation. The cost of depreciable plant and equipment usually expires over a period of several years, because of wear and tear, obsolescence, and general deterioration. This time period is normally referred to as the useful life of the facilities. Now it may be true that some assets have the inherent capability of being used in the manufacture of a known stated number of units of production. According to the author a widely accepted way of allocating the cost of the mentioned factors over their useful lives is through the use of straight line depreciation, where the charge against income each time period is simply equal to the cost of the lumpy factor divided by the number of time periods in its useful life.
III James A. Largay (1973) studied this question.