You Recently Won a Contest Sponsored by a Local Radio

question 111

Multiple Choice

You recently won a contest sponsored by a local radio station.The radio station will pay you $2,500 at the end of each of the next 15 years.Assuming an interest rate of 3%,what is the present value of this prize?

• A)$46,498
• B)$29,845
• C)$28,240
• D)$42,715

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Definitions:

Pure Monopoly

Pure Monopoly is a market structure where a single seller controls the entire supply of a product or service, and where the entry of new competitors is highly restricted.

Product Price

The cost assigned to a good or service which reflects its value in the marketplace.

X-inefficiency

X-inefficiency occurs when a firm produces outputs at higher costs than is theoretically necessary, often due to a lack of competitive pressure.

Monopoly Firms

Companies that are the sole provider of a product or service in a market, having exclusive control over supply and market competition.