A Lessee's Option to Purchase a Leased Asset at a Price

question 101

Multiple Choice

A lessee's option to purchase a leased asset at a price that is substantially lower than the asset's fair value is referred to as a(n) ________.

• A) bargain purchase option
• B) guaranteed purchase option
• C) early purchase option
• D) residual purchase option

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Definitions:

Decreasing-Cost Industry

An industry in which the costs of production decrease as the industry expands, often due to efficiencies gained from economies of scale.

Technologically Progressive Industry

An industry characterized by rapid and continuous technological innovation, leading to dynamic growth and evolution of its products and services.

Long-Run Supply Curve

A graphical representation showing the quantities of a good or service that a firm is willing and able to supply at different prices over a period where all inputs can be varied.

Constant-Cost Industry

Constant-Cost Industry refers to an industry in which the input prices do not change as industry output changes, leading to a flat supply curve.