A Judge Requires Harry to Make a Payment to Sally

question 105

Multiple Choice

A judge requires Harry to make a payment to Sally.The judge says that Harry can pay her either $10,000 today or $12,000 two years from today.Of the following interest rates,which is the highest one at which Harry would be better off paying the money today?

• A)4 percent
• B)6 percent
• C)9 percent
• D)11 percent

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Definitions:

Market Wage

The prevailing wage rate paid for a specific job in the labor market, determined by the supply and demand for that type of labor.

Market Price

The going rate at which an asset or service can be acquired or disposed of in a certain market.

Marginal Product

The additional output gained by employing one more unit of a specific input, holding all other inputs constant.

Market Wage

The average wage earned by workers in a specific market or industry, determined by the supply and demand for labor in that market.