Since breaking up the monopoly in which there are no economies of scale would increase output and lower prices, resources would have to be diverted from the competitive industry. Thus, the increased output in the former monopoly would come at the expense of the competitive output. This is because a fully employed economy has no slack resources. Therefore, the increased usage of factors of production in the former monopoly must come from the competitive industry. So the output in the competitive industry would fall.

In order to minimize average total cost under long run equilibrium, the monopolist would have to produce a larger output. The monopolist charges a price that is too high and produces an output that is too low to minimize average total cost.

If the lessee classifies the lease as a capital lease, then the lessor's classification depends on whether the following two additional conditions are satisfied:
The collectability of the lease payments is reasonably predictable.
*
No important uncertainties surround the amount of unreimbursable costs to be incurred by the lessor
*
under the lease.
If both these conditions are met, then the lease is a "sales-type lease" if there are manufacturing or dealer profits involved in the deal and is a "direct-financing lease" otherwise. If either of these conditions is not satisfied, the lessor must classify the lease as operating lease even if the lessee classifies as a capital lease.

When beginning inventory is overstated, inventory costs assigned to the cost of goods sold will be overstated and consequently the net income will be understated.