According to the Principle of Substitutability

question 30

Multiple Choice

According to the principle of substitutability:

• A) the price of basic commodities has risen because they cannot be substituted by alternatives.
• B) the five metals used in Simons' and Ehrlich's wager have since been substituted for others.
• C) human intellect devises creative ways to substitute new resources to solve resource scarcity.
• D) people are substitutable; those who die of starvation and disease will always be replaced by new births that result from increased population.

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Definitions:

Operating Lease

A lease agreement allowing a company to use an asset without ownership, with lease payments expensed as incurred.

Capital Leases

A lease agreement that grants the lessee almost all the risks and benefits of ownership of the asset leased.

Financial Lease

A long-term lease agreement where the lessee assumes the risks and rewards of ownership, often with the option to purchase the asset at the end of the lease term.

Lessor

A person or entity that owns an asset and leases it to another party (lessee) under a lease agreement.