Assume Dell Computer Company Operates in a Perfectly Competitive Market

question 60

Multiple Choice

Assume Dell Computer Company operates in a perfectly competitive market producing 5,000 computers per day. At this output level, price exceeds this firm's marginal cost. It follows that producing one more computer will cause this firm's

• A) total cost to decrease.
• B) profits to increase.
• C) profits to decrease.
• D) profits to remain unchanged.

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Definitions:

Sales-leaseback Transaction

A financial arrangement where one sells an asset and immediately leases it back from the buyer, effectively freeing up cash while retaining the use of the asset.

Seller-lessee

In a sale-leaseback transaction, the original owner who sells an asset and then leases it back from the new owner, retaining possession and use of the asset.

Deferred

Postponed or delayed; in financial terms, it often refers to expenses or income that will be realized at a future date.

Operating Lease

A leasing agreement allowing one party to use an asset owned by another party for a specified time period without ownership transfer.