Which of These Loan Rates Is Most Favorable

question 71

Multiple Choice

Which of these loan rates is most favorable?

• A) 12% compounded annually
• B) 11.5% compounded monthly
• C) 11.5% compounded quarterly
• D) 11% continuously compounded

---

Definitions:

Economic Profits

Profits exceeding the opportunity costs of all resources employed, including both explicit and implicit costs, signifying above-normal returns.

Long Run

An economic term referring to a period in which all factors of production and costs are variable, allowing for full adjustment to changes in the market.

Price-taking

A market condition in which individual buyers or sellers have no influence over the market price of a product, commonly seen in perfectly competitive markets.

Perfectly Competitive Industry

A market structure characterized by many sellers offering identical products, where no single seller can influence the market price.