How Much Interest Will Be Earned in the Next Year

question 68

Multiple Choice

How much interest will be earned in the next year on an investment paying 12 percent compounded annually if $100 was just credited to the account for interest?

• A)$88
• B)$100
• C)$112
• D)$200 The investment will again pay $100 plus interest on the previous interest:

---

Definitions:

Independently Acting Buyers

are consumers who make purchasing decisions based on their own preferences and circumstances, without coordinating with others.

Freedom to Enter

The condition in a market where new firms can enter the industry without facing prohibitive barriers or regulations.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choosing between options.

Diminishing Marginal Utility

The principle that as a consumer consumes more of a good or service, the additional satisfaction gained from each additional unit decreases.