You're Trying to Save to Buy a New Car Valued

question 41

Multiple Choice

You're trying to save to buy a new car valued at $48,690.You have $38,000 today that can be invested at your bank.The bank pays 3.7 percent annual interest on its accounts.How long will it be before you have enough to buy the car for cash? Assume the price of the car remains constant.

• A)5.13 years
• B)9.29 years
• C)4.67 years
• D)7.08 years
• E)6.82 years

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Definitions:

Total Variable Costs

The sum of all costs that vary with the level of output, including materials, labor, and other expenses that increase or decrease as production changes.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single company can supply a product or service at a lower cost than any potential competitor, thus dominating the market.

Unit Costs

The price a business incurs for the production, storage, and distribution of a single unit of a certain product or service.

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale regarding costs per unit of output.