Eleni, Who Is Now 55 Years Old, Is Employed by a Firm

question 78

Multiple Choice

Eleni, who is now 55 years old, is employed by a firm that guarantees her a pension of $40,000/year at age 65. What is the present value of her first year's pension if inflation over the next 10 year(s) is at the given rate. Assume that inflation is continuously compounded. 4% _________
8% _________
19% _________

• A) $32,749.23, $34,142.61, $5,982.74
• B) $32,749.23, $32,749.23, $5,982.74
• C) $32,749.23, $32,749.23, $34,142.61
• D) $26,812.80, $17,973.16, $5,982.74

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Definitions:

Demand Sensitive

Reacting to changes in consumer demand, often affecting pricing and production decisions.

Long-Run Demand

The overall demand for a product or service over an extended period, considering changes in market conditions and preferences.

Short-Run Demand

The demand for goods and services in the immediate future, influenced by current prices and income levels.

Highly Inelastic

Describing a situation where the quantity demanded or supplied changes very little in response to changes in price.