A major corporation hires high school students on a part-time basis. It offers a reward of $5,000 to any of its high school seniors who graduate college in four years. What is the present value of that reward to a student who just finished her junior year of high school, assuming a nominal rate of interest of 8%?

If an exhaustible resource is priced at marginal cost that remains constant over time, then

A) all owners of that resource earn rent. B) the price will stay constant over time. C) the percent price increase each year equals the rate of interest. D) the good is relatively scarce.

Which of the following is most subject to the lemons problem?

A) credence goods B) homogeneous goods C) search goods D) inferior goods