The Best Explanation for ________ Is a Fixed Factor Causes

question 323

Multiple Choice

The best explanation for ________ is a fixed factor causes diminishing returns to other factors.

• A) increasing returns to scale
• B) a horizontal marginal revenue curve
• C) a perfectly competitive firm earning economic profits in the long run
• D) the shape of a short-run marginal cost schedule

Explain the formation and rights of a third-party beneficiary in a contract.

Recognize the limitations on the ability to delegate duties and assign rights.

Understand the implications of assignments that increase risk or burden.

Describe the rights of obligors and assignees after an assignment.

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Definitions:

Implicit Rate

An interest rate implicit in the terms of a lease or other contract, representing the lessor's cost of capital or the lessee's incremental borrowing rate, not explicitly stated.

Leveraged Lease

A leasing arrangement in which the lessor uses borrowed funds to acquire the asset that is then leased out, allowing the lessor to benefit from tax advantages and leverage.

Operating Lease

A contract that allows for the use of an asset but does not transfer ownership of the asset to the lessee.

Capital Lease

A financial agreement where a lessee gains significant property rights, making it similar to owning the asset, for accounting purposes.