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Economics Lecture Eleven (view source)

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Read this lecture and look at some of the problems on the midterm exam. The homework assignment is light this week to give you time to spend reviewing concepts in the course. Then answer the problems below:

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Answer 4 out of 5:

1. If you were to loan someone money, why would you want him to pay you something extra (interest) when he pays back the loan? Give at least one reason.

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2. Suppose I ~~will pay~~ you $1000 ~~in two years~~, and ~~the~~ interest ~~rate is 10~~% per year, compounded annually~~. How much should~~ you pay ~~me today~~ to ~~receive $1000 in two years~~? ~~Show your work.~~

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2. Suppose I loaned you $1000 today, and interest rates are 5% per year (compounded annually), and you repaid the loan plus interest in 2 years, then what is the total you would pay to satisfy the debt?

3. Review: is the cost of the bus for a trip to D.C. a "fixed cost" or a "variable cost"? Explain.

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4.

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4. Which concept in Economics is the best as a self-motivator, which you might use to do and achieve more?

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5. Suppose I will pay you $1000 in two years, and the interest rate is 10% per year, compounded annually. How much should you pay me today to receive $1000 in two years? Show your work.

===Honors===

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Economics Lecture Eleven (view source)

Revision as of 04:27, November 18, 2009

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