If a Leased Asset Has Maintenance Offered as an Included

question 21

Multiple Choice

If a leased asset has maintenance offered as an included extra, such an extra would be evaluated differently from other leasing cash flows in this way.

• A)Maintenance would be estimated over shorter time intervals than the lease
• B)Maintenance would represent an extra cost to the lessee
• C)Maintenance would be discounted at a higher discount rate to reflect risk, and represent a cash inflow for lessee
• D)Maintenance would all be paid up front

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Definitions:

Deadweight Loss

A decrease in economic efficiency arising when a good or service fails to attain or cannot possibly attain equilibrium.

Deadweight Losses

Economic inefficiencies that occur when equilibrium in a market is not achieved or when market allocation of resources is not optimal, often due to externalities or government intervention.

Consumer Surplus

A rephrased definition: The economic benefit that consumers receive when they can purchase a product for less than the maximum price they are willing to pay.

Consumer Surplus

The gap between the overall sum consumers are ready and able to spend on a product or service and what they really spend.