Hardwood Furniture Store Considered Building a Store in a New

question 100

Multiple Choice

Hardwood Furniture Store considered building a store in a new location. The owners and their accountants decided that this was the profitable thing to do. However, soon after they made this decision, both the interest rate and the cost of building the store changed. In which case do these changes both make it less likely that they will now build the store?

• A)Interest rates rise and the cost of building the store rises.
• B)Interest rates rise and the cost of building the store falls.
• C)Interest rates fall and the cost of building the store rises.
• D)Interest rates fall and the cost of building the store falls.

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Definitions:

Pareto Optimal

A situation in which it is impossible to make any one individual better off without making at least one individual worse off.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Private Consumption

The total spending by households and individuals on goods and services for personal use, excluding government spending.

Pareto Optimal

A circumstance in resource distribution where an improvement for one individual correlates with a setback for another.