Or the Purpose of the Purchasing Professional, Two Methods Will

question 8

True/False

or the purpose of the purchasing professional, two methods will be considered: (1) traditional loans and (2) leases. The leasing method has been become very popular in the last 20 years and can be used to finance nearly any kind of fixed asset. The lease-versus-purchase decision usually requires many considerations.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or with volume of output.

Inelastic Demand

A market situation where the demand for a product does not significantly change with a change in its price.

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning that a small change in price results in a large change in the quantity demanded.

Fixed Cost

Costs that do not vary with the level of production or sales activities, such as rent or salaries.