Suppose That Interest Payments Are $140 Per Year on a $1,000

question 58

Multiple Choice

Suppose that interest payments are $140 per year on a $1,000 loan and $1,188 per year on an $8,485 loan. The interest rates on the two loans are

• A) 14 percent and 20 percent, respectively.
• B) 14 percent on both loans.
• C) 18.8 percent on both loans.
• D) 1.4 percent and 11.8 percent, respectively.

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Definitions:

Rational Self-Interest

The principle that individuals prioritize actions that result in the most personal benefit, assuming rational decision-making processes.

Collude

When two or more firms agree to limit competition between themselves, often to set prices or output levels to maximize collective profits.

Sealed-Bid

A method of auction or tendering process where all bidders simultaneously submit their bids in sealed envelopes, not known to others until the opening.

Expected Revenue

Refers to the forecasted amount of money a business expects to receive from sales over a certain period.