Stanley Receives the Following Marginal Utilities from the First Four

question 9

Multiple Choice

Stanley receives the following marginal utilities from the first four car washes that he buys each year,respectively: 20,15,10,and 5.If each car wash sells for $10,then the marginal utility per dollar spent on the third car wash is

• A)10
• B)4.5
• C)1
• D)45
• E)5

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Definitions:

Annuity

An economic offering that guarantees regular payouts to an individual, typically used to supplement the income of those who are retired.

Payments Cease

Refers to the termination or halt of scheduled payments, often in the context of loans or financial instruments.

Pure Discount Loan

A loan where the borrower receives a single lump sum amount upfront and repays the lender a higher amount at the loan's maturity.

Lump Sum

A single payment of money, as opposed to a series of payments made over time.