Solve the Problem. -Rafael Received an Inheritance of $27,000. He Saves $13,700 and Saves

question 213

Multiple Choice

Solve the problem.
-Rafael received an inheritance of $27,000. He saves $13,700 and then spends $13,300 of the money on college tuition, books, and living expenses for school. If the money is respent over and over
Again in the community an infinite number of times, at a rate of 62%, determine the total amount
Spent.

• A) $21,452
• B) $43,548
• C) $35,000
• D) $71,053

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Definitions:

Law Of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if all other variables remain at a constant.

Marginal Output

The additional quantity of a product that is produced from using one more unit of an input, keeping other inputs constant.

Diminishing Returns

A principle stating that if one factor of production is increased while other factors are held constant, the incremental output or benefit gained will eventually decrease.

40-Acre Farm

A piece of farmland covering 40 acres, often used historically in the context of post-Civil War land redistribution promises in the United States.