When Calculating the Optimal Blend of Down Payment and Interest

question 61

Multiple Choice

When calculating the optimal blend of down payment and interest rate to purchase an automobile,a limit of no more than a $10,000 down payment is an example of which of the following?

• A)Nonbinding constraint
• B)Objective cell
• C)Integer
• D)Set cell

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one more unit of a good varies as production volume changes.

Diminishing Returns

A principle stating that as additional units of a variable input are added to a fixed input, the marginal product of the variable input eventually decreases.

Upward-Sloping

Describes a line or curve on a graph that moves higher on the y-axis as it moves to the right on the x-axis, typically used to describe a supply curve in economics.