Question

On January 1, 2024, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. What is the duration of the lease agreement?

1) 5 years
2) 7 years
3) 9 years
4) 11 years

Answer 1

The lease agreement duration between Café Med and Crescent Corporation is nine years, starting on January 1, 2024. 'The long run' in business allows all factors to be variable, which means options to relocate after the lease ends.The correct option is 3.

Step-by-step explanation:

The duration of the lease agreement between Café Med and Crescent Corporation, as stated in the student's question, is nine years. This lease agreement allows Café Med to use the restaurant equipment for the entire nine-year term starting from January 1, 2024. In the context of business and economics, the term 'the long run' refers to a period in which all factors of production are variable. Following the conclusion of the lease, Café Med will have the flexibility to make decisions such as moving to a different location that could be larger or smaller, depending on the business's needs and circumstances at that time.