Based on Your Understanding of the Rules for Determining When

question 7

Multiple Choice

Based on your understanding of the rules for determining when an object becomes a fixture, which of the following items would most likely be considered a fixture at the time of sale?

• A) Custom (built-in) bookshelves
• B) Refrigerator in a single-family residence being sold
• C) Fence installed by the tenant of a rental property
• D) Curtains

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Definitions:

Short Run

A period in which at least one input (such as plant size, machinery) is fixed and cannot be changed by the firm.

Capital Investment

Funds invested in a firm or enterprise for the purpose of furthering its business objectives, including purchasing assets or stocks.

Short-Run

A timeframe in which a company cannot alter at least one of its resources.

Economic Profit

The difference between the total revenue earned by a firm and the total cost of inputs, including both explicit and implicit costs.