Suppose That Firms a and B Each Produce High-Resolution Computer

question 266

Multiple Choice

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? i) Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.
Ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

• A) i) only
• B) ii) only
• C) both i) and ii)
• D) neither i) nor ii)

Calculate the real rate of return on an investment taking inflation into account.

Understand and calculate effective interest rates for various compounding periods.

Determine equivalent interest rates across different compounding intervals.

Calculate time to maturity for bonds and investments.