Recall the Application About Jasper Johns and House Painting to Answer

question 125

Multiple Choice

Recall the Application about Jasper Johns and house painting to answer the following question(s) . In this
Application, it is assumed that Johns can earn $5,000 per day by painting works of art, and therefore
should hire a housepainter who charges $150 per day, and takes 10 days, to paint his house.
-Based on the Application, Jasper Johnsʹ daily earnings are 33.33 times more than the houspainterʹs daily earnings. If Jasper Johnsʹ earnings per day were only twice as much as the housepainterʹs earnings, what should he do?

• A)He should still hire the housepainter to paint his house.
• B)He should paint his house himself.
• C)He should hire a less productive housepainter.
• D)He should remain indifferent as to who paints the house, for the difference in daily earnings would now be much less significant.

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Definitions:

Tax Bracket

A range of incomes taxed at a specific rate, with different portions of income being taxed at progressively higher rates as income increases.

Collateral

An asset that a borrower offers to a lender as security for a loan, which can be seized if the borrower fails to repay the loan.

Callable Bond

A type of bond that gives the issuer the right to pay off the bond before its maturity date.

Debenture

A type of debt instrument that is not secured by physical assets or collateral.