Use the Following Statements to Answer This Question: I

question 70

Multiple Choice

Use the following statements to answer this question: I. A positive deadweight loss necessarily occurs in labor markets that have one seller (e.g., labor union) .
II) The deadweight loss in a labor market with one seller (e.g., labor union) is smaller if the union maximizes the total wages earned by union members than if the union maximizes total economic rents.

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Lessor

The party in a lease agreement who owns the asset and grants its use to another party (the lessee) for a specified period in exchange for payment.

Leveraged Lease

The lessor borrows a portion of the funds needed to buy the equipment to be leased.

Lessee's Standpoint

A perspective focusing on the rights, obligations, and financial impacts on the individual or entity that leases an asset from another.

Unleveraged Lease

A lease agreement where the lessee does not increase their leverage ratio by adding debt to finance the lease.