One of the Main Reasons for Firms Entering into an Operating

question 19

Multiple Choice

One of the main reasons for firms entering into an operating lease as the lessee is:

• A)it is an equivalent alternative to buying the asset.
• B)they can claim tax deductions for depreciation.
• C)they can claim tax deductions for rental payments.
• D)uncertainty about the length of time for which the asset is required.

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Definitions:

Marginal Returns

Marginal Returns refer to the additional output or benefit received from increasing one unit of a particular input while keeping other inputs constant.

Marginal Cost

The incremental cost associated with the production of an extra unit of a product or service.

Marginal Cost Curve

A curve that displays the additional cost associated with producing one more unit of output, typically showing how marginal cost changes with changes in production volume.

Total Cost Curve

A graph that shows the total cost incurred by a firm in the production of goods or services at different levels of output.