You Have a 30-Year Mortgage with a Simple Annual Interest

question 87

Multiple Choice

You have a 30-year mortgage with a simple annual interest rate of 8.5 percent.The monthly payment is $1,000.What percentage of your total payments over the first three years goes toward the repayment of principal?

• A) 1.50%
• B) 3.42%
• C) 5.23%
• D) 6.75%
• E) 8.94%

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Definitions:

Inelastic Demand

The condition when the quantity demanded of a product changes very little in response to changes in its price.

Profit-Maximizing

The approach by which an enterprise figures out the optimal pricing and production levels for the highest profit return.

Marginal Revenue

The supplementary income resulting from the sale of one more good or service unit.

Price-Searcher Firm

A company that operates in a market with differentiated products and has some control over the price of its product because it faces a downward-sloping demand curve.