Supposing a college education is choosing between an expensive school ($200,000 over 4 years) and a less expensive school ($40,000 over 4 years), the student should
A. choose the more expensive school only if the present value of the difference in salary is $160,000 or more.
B. choose the more expensive school only if the difference in salary will total $160,000 or more.
C. choose the more expensive school only if the present value of the difference in salary is $160,000 or less.
D. choose the more expensive school only if the difference in salary will total $160,000 or less.
Answer: A
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Assume a firm produces 500 units of a good by using two inputs, capital and labor, whose per unit prices are $10 and $4
Assume also that the marginal physical product of the last unit of capital is 30 and the marginal physical product of the last unit of labor is 10. Is this firm minimizing its costs of producing 500 units of output? A) No, because the marginal products of the two inputs are not equal. B) No, because the MRTS and the price ratio for the two inputs are not equal. C) No, because the prices of the two inputs are not equal. D) The answer cannot be determined without more information.
The long run is a planning period:
A. during which the firm can vary all inputs including its plant size. B. less than six months. C. less than one year. D. less than five years.