Which of the Following Would You Prefer

question 94

Multiple Choice

Which of the following would you prefer?

• A)$400 to be received in nine years when rates are 8 percent
• B)$210 today
• C)$500 to be received in 12 years when rates are 8 percent
• D)$500 to be received in 12 years when rates are 9 percent

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Definitions:

Demand Equation

A mathematical representation of the relationship between the quantity of a good consumers are willing and able to buy and the good's price.

Supply Equation

An economic formula that represents the relationship between the quantity of a good supplied by producers and the price of the good.

Price Floor

A minimum price set by the government for certain goods and services, intended to prevent prices from dropping too low.

Shortage/Surplus

A situation in the market where the amount of a product that consumers want to buy is greater than the amount available (resulting in a shortage), or the available amount is more than what consumers want to purchase (leading to a surplus).