Jaime Has an Old Car That He Expects Will Last

question 44

Multiple Choice

Jaime has an old car that he expects will last for only three more years. He says he derives $1,000 worth of services from the car each year. He expects the scrap value of the car to be so low that it is not worth considering. If the interest rate is 7 percent, it is not likely that he will sell the car unless he is paid more than

• A)$763.
• B)$2,800.
• C)$1,562.
• D)$1,925.
• E)$2,624.

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Definitions:

Internal Causes

Factors within an individual, such as traits, beliefs, or desires, that explain or influence their behavior.

Stable Causes

Factors or conditions that consistently contribute to an outcome or effect with little variation over time.

Actor-Observer Bias

A cognitive bias involving the tendency to attribute one's own actions to external factors while attributing others' actions to their personality or disposition.

Cognitive Dissonance

A psychological phenomenon that occurs when an individual experiences discomfort due to holding conflicting beliefs or values.