Table 4-F
the Schedule Below Represents the Willingness of a Typical

question 31

Multiple Choice

Table 4-F
The schedule below represents the willingness of a typical consumer to pay for wine in a year. Suppose there are 10,000 identical consumers in the community.
$$\begin{array} { c c } \text { Price Per } & \text { bottles of Wine Consumed } \\\text { Bottle of Wine } & \text { Per Year } \\\$ 50 & 1 \\440 & 2 \\\$ 30 & 3 \\\$ 20 & 4 \\\$ 10 & 5\end{array}$$
-Refer to Table 4-F.If the market price of wine is $30, the total consumer surplus for the community equals:

• A)$20,000.
• B)$30,000.
• C)$50,000.
• D)$60,000.
• E)$80,000.

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Definitions:

Present Value Factor

A multiplier used in calculating the present value of a future amount of money or stream of cash flows given a specific discount rate.

Compounded Semiannually

A method of calculating interest where the interest is added to the principal amount twice a year, leading to interest earning interest over time.

Compounded Annually

A method of calculating interest where the interest is added to the principal sum each year, thus each subsequent interest calculation is made on an increased principal.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.