Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)If a firm only needs to use the asset for a short time,it is probably less costly to lease it than to buy and resell the asset.
• B)While owners of assets are likely to resell them only if the assets are "lemons," a short-term lease can commit the user of an asset to return it regardless of its quality.In this way,leases can help mitigate the adverse selection problem in the used goods market.
• C)Car dealerships are in a better position to sell a used car at the end of a lease than a consumer is.
• D)If the asset's tax depreciation deductions are faster than its lease payments,there are tax gains from a true tax lease if the lessor is in a lower tax bracket than the lessee.

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Definitions:

Variable Resources

Inputs that change in quantity with levels of production, such as raw materials and labor.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

ATC

Average Total Cost, which is the sum of all production costs divided by the quantity of output produced.

MC

Marginal Cost, the change in total production cost that comes from making or producing one additional unit.