Bill Cigarettes Acquired a Bad Habit of Smoking in High

question 54

Short Answer

Bill Cigarettes acquired a bad habit of smoking in high school. Bill spends approximately $70 a month or $840 a year on cigarettes. He is not concerned with health issues but he is keenly aware of financial issues. Show Bill how much he would have at retirement in 20 years if he invested $840 a year at 8% instead of smoking.

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Definitions:

Consumer Surplus

The divergence between the expected payment by consumers for a product or service and the actual payment made.

Producer Surplus

The difference between the amount producers are willing and able to supply goods for versus the amount they actually receive due to market prices.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net gain to society from the production and consumption of goods and services.

Tariff Revenue

Income that a government collects from imposing duties on imported goods.