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You are considering two lottery payment options:
Option A pays $10,000 today and Option B pays $20,000 at the end of ten years.Assume you can earn 6 percent on your savings.Which option will you choose if you base your decision on present values?
Which option will you choose if you base your decision on future values?
Explain why your answers are either the same or different.
Perfectly Inelastic
A situation where demand or supply does not change in response to a change in price.
Demand Curve
A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at different prices.
Price Elasticity
The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price. It reflects the sensitivity of consumers or producers to price changes.
Unit Price Elastic
A situation in which the percentage change in quantity demanded is equal to the percentage change in price, resulting in no change in total revenue.
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