8. Allocation of resources between present and future A painter is deciding whether to purchase a new paint sprayer. The sprayer costs $150 and has a useful life of just one year. The expected revenue from the sprayer is $159, which means the expected profit is $9. Use this information to fill in the table. Determine whether or not the painter should purchase the sprayer at the stated interest rate. Interest Rate (Percent) 5 10 Buy the Sprayer? The preceding example demonstrates how the interest rate can allocate resources among different time periods. However, economists have questioned the effectiveness of this mechanism for the efficient allocation of resources in practice. Which of the following are reasons for such doubt? Check all that apply. Economic prosperity has widely fluctuated from one decade to the next. Governments frequently manipulate interest rates to affect consumption and investment. People do not give adequate weight to the future when making economic decisions today.

8. Allocation of resources between present and future A painter is deciding whether to purchase a new paint sprayer. The sprayer costs $150 and has a useful life of just one year. The expected revenue from the sprayer is $159, which means the expected profit is $9. Use this information to fill in the table. Determine whether or not the painter should purchase the sprayer at the stated interest rate. Interest Rate (Percent) 5 10 Buy the Sprayer? The preceding example demonstrates how the interest rate can allocate resources among different time periods. However, economists have questioned the effectiveness of this mechanism for the efficient allocation of resources in practice. Which of the following are reasons for such doubt? Check all that apply. Economic prosperity has widely fluctuated from one decade to the next. Governments frequently manipulate interest rates to affect consumption and investment. People do not give adequate weight to the future when making economic decisions today.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The general case of interest rate is simple interest rate. Select one: True False
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