You Just Won a Contest! You Will Receive $100,000 a Year

question 111

Multiple Choice

You just won a contest! You will receive $100,000 a year for 20 years,starting today.If you can earn 12 percent on your investments,what are your winnings worth today?

• A)$750,000.00
• B)$833,333.33
• C)$836,577.69
• D)$850,000.00
• E)$887,450.72

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, contrary to what happens with a normal good.

Net Supplier

An entity that provides more of a good or service to the market than it consumes from it.

Normal Good

A category of product that sees a rise in demand as the consumer's income grows, indicating a direct correlation between income levels and demand.

Backward-Bending

Refers to the backward-bending supply curve of labor, indicating that beyond a certain wage level, labor supply decreases as income and substitution effects impact workers' willingness to work.