Last Semester a Class Gave a Professor $810 to Fly

question 46

Multiple Choice

Last semester a class gave a professor $810 to fly to Borneo. However, he decided not to go until he had enough money to fly back, an additional $690. If he invests the $810 at 8%, when can he make the trip, assuming no change in ticket prices?

• A) 8 years
• B) 6 years
• C) 4 years
• D) 2 years

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, reflecting extra profit.

Relatively Elastic

Refers to a situation in which the demand or supply for a good or service greatly responds to changes in price.

Tax Incidence

Refers to the distribution of the economic burden of a tax between buyers and sellers in the market.

Deadweight Loss

A reduction in total welfare or economic efficiency, typically resulting from inefficiencies such as taxes or monopolies.