You Own a Small Machine Shop

question 257

Multiple Choice

You own a small machine shop. You would like to save $180,000 to buy some new equipment two years from now. The plan is to set aside an equal amount of money each quarter, starting today. You can earn a 5.3% rate of return. How much does the firm have to save each quarter to achieve this goal?

• A) $20,637.04
• B) $20,709.18
• C) $20,711.14
• D) $21,196.31
• E) $21,477.16

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Definitions:

Cross-price Elasticity

Cross-price elasticity measures how the quantity demanded of one good responds to a change in price of another good, indicating the degree of substitutability or complementarity between them.

Elasticity of Supply

The measure of how much the quantity supplied of a good changes in response to a change in price.

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding everything else constant.

Housing Demanded

The quantity of residential properties that buyers are willing and able to purchase at a given price level.