You Have Just Received Notification That You Have Won the $1.4

question 6

Multiple Choice

You have just received notification that you have won the $1.4 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100^th birthday, 70 years from now. The appropriate discount rate is 8 percent. What is the present value of your winnings?

• A)$4,288.16
• B)$6,404.20
• C)$15,309.91
• D)$23,333.33
• E)$25,000.00

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Definitions:

Linear Demand Curve

A graphical representation showing how the quantity demanded of a good or service varies with its price, typically depicted as a straight line on a graph.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay, reflecting consumer benefit.

Market Price

The present rate at which a product or service can be purchased or sold on the market.

Downward-Sloping Demand

A market situation in which the quantity demanded of a good or service decreases as its price increases, depicting an inverse relationship between price and demand.