Bert,a Self-Employed Attorney,is Considering Either Purchasing or Leasing a $50,000

question 74

Essay

Bert,a self-employed attorney,is considering either purchasing or leasing a $50,000 automobile for use in his business.What are the issues he should consider in making his decision?

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Definitions:

Total Cost

The complete cost of production, encompassing both fixed and variable costs, for a good or service.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; decreases as production increases.

Average Variable Cost

The per unit cost of variable inputs divided by the total quantity of output produced, reflecting the variable cost of production.

Marginal Revenue

The additional income generated by increasing product sales by one unit.