If Jim Can Sell Paper at a Lower Opportunity Cost

question 148

Multiple Choice

If Jim can sell paper at a lower opportunity cost than Dwight can,then:

• A) Jim has an absolute advantage in paper sales.
• B) Dwight has an absolute advantage in paper sales.
• C) Jim has a positive advantage in paper sales.
• D) Jim has a comparative advantage in paper sales.
• E) Dwight has a comparative advantage in paper sales.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its usage and wear and tear.

Direct Financing Leases

A type of lease where the lessor accounts for the asset as a receivable at an amount equal to the net investment in the lease.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the sale, in addition to interest revenue over the lease term, similar to a financial purchase.