An Individual with No Investment Opportunities Has Income of $15,000

question 19

Multiple Choice

An individual with no investment opportunities has income of $15,000 in period 0 and income of $10,000 in period 1. If the interest rate is 7%, which of the following points is on the individual's consumption possibility line?

• A) $3,000 in period 0 and $21,215 in period 1.
• B) $4,000 in period 0 and $21,116 in period 1.
• C) $10,000 in period 0 and $15,350 in period 1.
• D) $16,000 in period 0 and $9,000 in period.
• E) $18,800 in period 0 and $6,200 in period 1.

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Definitions:

Price Elasticity

Price elasticity measures how the quantity demanded of a good is affected by a change in its price, with high elasticity indicating sensitivity to price changes.

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price over a specified period.

Elastic

Describes a situation where the quantity demanded or supplied of a good is sensitive to changes in its price.

Current Margin

The existing difference between a company's sales and its variable costs, indicating the portion of sales revenue that covers fixed costs and profits.