You Need a Loan of $100,000 to Buy a Condo $4 \%$

question 30

Multiple Choice

You need a loan of $100,000 to buy a condo. Calculate your monthly payments and total closing costs for each choice.
-Choice 1: 30-year fixed rate at $4 \%$ with closing costs of $\$ 1323$ and no points Choice 2: 20-year fixed rate at $3.5 \%$ with closing costs of $\$ 1323$ and 2 points

• A) Choice 1: \(\$ 543.49 ; \$ 1323\)
• Choice 2: \(\$ 474.36 ; \$ 3123\)
• B) Choice 1: \(\$ 605.98 ; \$ 1323\)
• Choice 2: \(\$ 449.04 ; \$ 3073\)
• C) Choice 1: \(\$ 477.42 ; \$ 1323\)
• Choice 2: \$579.96; \$3323
• D) Choice 1: \(\$ 421.10 ; \$ 1323\)
• Choice 2: \(\$ 586.19\); \$2646

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Definitions:

Differentiated Products

are goods or services that are distinguishable from each other on the basis of quality, features, or branding, leading to non-price competition among firms.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied changes by an infinite amount in response to any change in price, represented graphically as a horizontal line.

Monopolistic Competitor

A type of market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power.

Monopolistically Competitive

Refers to a market setup where multiple companies offer products that are closely related but not the same, granting them limited market influence.