Suppose the Periodic Rate for One Month Is 0

question 179

Essay

Suppose the periodic rate for one month is 0.5%. Is the equivalent periodic rate for six months (pick one):
(i) equal to 6(0.5%) = 3%?
(ii) less than 3%?
(iii) greater than 3%?
Answer the question without doing calculations. Explain your choice.

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Definitions:

Consumer Surplus

The divergence between the expected payment by consumers for a product or service and the actual payment made.

Producer Surplus

The difference between the amount producers are willing and able to supply goods for versus the amount they actually receive due to market prices.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net gain to society from the production and consumption of goods and services.

Tariff Revenue

Income that a government collects from imposing duties on imported goods.