If the annual interest rate is i, the present value of $X to be received at the end of each future year forever is:
a. $X/(1 + i)
b. $X/i
c. $X/(1 + i) n
d. $X/i n
e. $X n /i n
Answer: b. $X/i
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Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100 bushels of corn today is
A) 100 bushels of corn next year. B) 25 bushels of corn next year. C) 10 bushels of corn next year. D) 2.5 bushels of corn next year.
A price ceiling is
A) the lowest price a seller can charge for a good without losing all her customers. B) a legal minimum price that can be charged for a particular good or service. C) a legal maximum price that can be charged for a particular good or service. D) the lowest price a buyer can pay for a good without having to report the purchase to the government.