Liam Had $5,200 in Student Loans

question 21

Multiple Choice

Liam had $5,200 in student loans. On August 9, he began repayments of $50 per month when interest rates were 9.2% annually. On September 8, the interest rates rose to 9.5%. By what amount will the principal be reduced given the $50 payment on September 30?

• A) $8.90
• B) $9.91
• C) $10.90
• D) $11.90
• E) $12.90

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Definitions:

AVC

Average Variable Cost is the total variable cost per unit of output, which is calculated by dividing total variable costs by the quantity of output.

MC

Marginal Cost, the increase or decrease in the total cost of a production run for making one additional unit of an item.

Long Run

A period in economic analysis where all factors of production can be varied, and no inputs are fixed.

Shut Down

The process of ceasing operations, often temporarily, due to various reasons like lack of demand, financial trouble, or external circumstances.