In Manifold, Missouri (Pop

question 60

Multiple Choice

In Manifold, Missouri (pop.1,000) , people all have the same tastes and they all like Buicks.Nobody wants more than one Buick, but a person with income $M is willing to pay about $.10M per year to have a Buick.Nobody in Manifold has an income greater than $50,000 and nobody has an income less than $10,000.For incomes, $M, between $10,000 and $50,000, the number of people with incomes greater than $M is about 1,250 - .025M.If it costs $2,000 a year to have a Buick, how many people in Manifold will demand Buicks?

• A)500
• B)750
• C)100
• D)600
• E)800

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Definitions:

Per Year

A synonym for annually, denoting events or measurements taking place once every calendar year.

Effective Annual Rate

The interest rate on an investment or loan, which is annualized by considering the effect of compounding over a given period.

Amortized Mortgage

A loan for which the principal and interest are paid down through regular payments over the loan's term, leading to full repayment by the end.

Nominal Interest Rate

The rate of interest before any adjustment for inflation; the stated or face interest rate on a loan or investment.