Suppose the interest rate is 5 percent. Consider three payment options: 1 . $500 today. 2 . $520 one year from today. 3 . $550 two years from today. Which of the following is correct?
a. 1 has the lowest present value and 3 has the highest.
b. 2 has the lowest present value and 1 has the highest.
c. 3 has the lowest present value and 2 has the highest.
d. None of the above is correct.
b
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Claudia's Copy Shop is deciding which 3-D printer to purchase, and it only has room for one printer
It can purchase the "Mini-Me" small-object printer, which would generate benefits of $50,000 at a cost of $5,000, or it can purchase the "Gargantuan" large-object printer which would generate benefits of $250,000 at a cost of $25,000. Based on these numbers, Claudia's Copy Shop should purchase A) the "Mini-Me" printer. B) the "Gargantuan" printer. C) either printer, since the cost of each is exactly 10 percent of the benefit from each. D) neither printer, since the cost of each is too high for a 3-D printer.
Stagflation is the combination of
A) inflation and increasing real GDP. B) deflation and recession. C) inflation and recession. D) deflation with increasing real GDP.
Accounting profits are typically
A) greater than economic profits because accounting profits do not include explicit costs. B) greater than economic profits because accounting profits do not include implicit costs. C) smaller than economic profits because accounting profits do not include explicit costs. D) equal to economic profits in the long run.
People supply their resources to the highest-paying alternative, even if working conditions are not equally attractive
a. True b. False