Refer to the Accompanying Table $\text { Maximum Willingress to Pay (NWP) for Ice Cream }$

question 44

Multiple Choice

Refer to the accompanying table. Imagine there are two cities (City A and City R) and you are the only provider of ice cream sandwiches for both. Use this information to answer the questions. $\text { Maximum Willingress to Pay (NWP) for Ice Cream }$
$\text { Sandwiches }$
$\begin{array}{llll}\text { City A } & \text { MWP } & \text { City R } & \text { MWP } \\\text { Aladdin } & \$ 16 & \text { Richard } & \$ 15 \\\text { Alan } & \$ 12 & \text { Ramon } & \$ 14 \\\text { Alvin } & \$ 10 & \text { Robert } & \$ 13 \\\text { Albert } & \$ 8 & \text { Roger } & \$ 11 \\\text { Albus } & \$ 6 & \text { Reginald } & \$ 4\end{array}$
$\text { Unit cost is } \$ 7 \text { for each ice cream sandwich }$
-If you are a profit-maximizing firm and you can charge a single price in both cities, how much would your profit be?

• A) $6
• B) $20
• C) $25
• D) $60
• E) $64

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Definitions:

Pure Rate

The interest rate exclusive of all other elements such as risk premium, inflation, or other costs often considered the real rate of interest with no adjustments.

Default Risk Premium

The additional yield that a borrower must offer to compensate lenders for the risk that the borrower may fail to make required payments.

Corporate Bond

A type of debt security issued by corporations to finance their operations, projects, or expansion plans.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used to finance government spending.