You Are Considering Applying for One of Two Credit Cards

question 36

Multiple Choice

You are considering applying for one of two credit cards. Credit card "A" has an annual fee of $30 and charges interest of 10%. Credit card "B" has no annual fee, but charges an interest rate of 15%. If you carry an average balance of $500 on your credit card, the lowest total annual expenses you could have with one of these two credit cards would be

• A) $50.
• B) $80.
• C) $75.
• D) $90.

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Definitions:

Societal Welfare

The overall well-being and quality of life of the people in a society, often considered in terms of economic, social, and environmental indicators.

Relative Price

The price of a good or service in comparison to that of other goods and services, reflecting its value relative to alternative purchases.

Economic Efficiency

A situation where resources are allocated in a way that maximizes the production of goods and services.

Marginal Rate Of Technical Substitution

The rate at which one input can be substituted for another input while keeping the level of output constant.