Use the Following to Answer Question

question 20

Multiple Choice

Use the following to answer question:
Figure 18.1
-(Figure 18.1) Suppose that people selling their homes fall prey to the sunk cost fallacy, refusing to sell at the going market price to avoid a nominal loss during an economic downturn. What price might these homeowners try to sell their homes for?

• A) $120,000
• B) $150,000
• C) $100,000
• D) any price less than $120,000

---

Definitions:

Treasury Bill

A short-term government security issued at a discount from the face value and yielding the face value upon maturity.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans, dictated by supply and demand forces.

Simple Interest

Interest earned or paid only on the original principal amount invested or loaned.

Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, usually large corporations.