Which of the Following Correctly Describes an Installment Note

question 28

Multiple Choice

Which of the following correctly describes an installment note?

• A)An installment note requires equal interest payments with the entire principal balance paid at maturity.
• B)An installment note requires equal payments of interest and principal in which the amount of interest decreases over the life of the note.
• C)An installment note requires equal payments of interest and principal in which the amount of interest increases over the life of the note.
• D)The installment note requires decreasing payments of interest and principal in which the amount of interest remains constant over the life of the note.

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Definitions:

Average Total Cost

The sum of all production costs divided by the quantity of output produced, synonymous with the cost per unit including all variable and fixed costs.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and firms in the industry make just enough profit to stay in business.

Short-run Profits

Short-run profits occur when a company's revenue exceeds its operating costs within a particular, relatively brief period.

Long Run

A period in economics where all inputs, including capital and labor, can be adjusted.