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1. Suppose you are considering buying a gold deposit. It will cost $1 million per year to construct a mine so that gold can be extracted. The construction period lasts 3 years. In the fourth year, production starts. Each year the mine operates, it will yield a profit (total revenue minus total cost) of $500,000. Costs are paid and profits are received at the beginning of the respective year. What will you pay for the gold deposit if:

a. Interest rates are 10% and gold can be extracted for 6 years?

b. Interest rates are 5% and gold can be extracted for 10 years? 

2. What is the difference between private ownership and open access?

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

Suppose you are considering buying a gold deposit. It will cost $1 million per year to construct a mine so that gold can be extracted. The construction period lasts 3 years. In the fourth year, production starts. Each year the mine operates, it will yield a net return (total revenue - total cost) of $500,000. What will you pay for the gold deposit if:

a. Interest rates are 10 percent and gold can be extracted for 10 years?

b. Interest rates are 5 percent and gold can be extracted for 6 years?

Question#1: How will the real interest rate affect the cost of your car loan?

Let’s assume that the old clunker you have been driving needs $500 in repairs in order to pass an annual car inspection. You are considering buying a new car, and you contact car dealers and banks to determine the best deal you can get on a car loan. Assume two different scenarios: (a) The lowest interest rate you find on a five-year car loan is 10 percent, and the annual rate of inflation for the next five years will be 9 percent. (b) The lowest interest rate you can find on a five-year car loan is 6 percent, and the annual rate of inflation for the next five years will be 1 percent.

Question: Under which scenario—(a) or (b)—will you pay less, in real income, for your car loan?

1.Money must be ________ which includes the fact that it should ________. (I think it's B?)

A. in physical form; not be transferable using electronic means
B. generally accepted as a means of payment; be recognizable and divisible into small parts
C. whatever is used in a barter system; transferable across countries' borders
D. backed by gold; not decrease in value over time
E. accepted as a means of payment across countries' borders; not be fiat money

2.When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

(I think it's E)

A. the gold receipts were considered money because they were used as a means of payment.
B. an infant banking system developed in sixteenth century Europe.
C. money was invented.
D. fiat money was created.
E. Both A and B are correct.

3.Which of the following statements are correct?

Congress does not play a role in making monetary policy decisions.
The FMC meets eight times a year to make monetary policy decisions.
The President of the United States appoints members and the Chairman of the Board of governors but has little other formal authority over monetary policy.

A. ii only
B. ii and iii
C. i, ii, and iii
D. i and iii
E. i,and ii

4.If Jose deposits $2,000 in his bank and the desired reserve ratio is 10 percent, what is the amount of new loans that the bank can make?

A. $200
B. $1,900
C. $1,800
D. $2,000
E. $2,200

5.In order to influence the interest rate, the Federal Reserve System can immediately adjust the

A. amount the government borrows.
B. taxes that citizens must pay.
C. reserves of the banking system.
D. inflation level.
E. unemployment rate.

6.The government collects tax revenue of $100 million and has $105 million in outlays. The budget balance is a

A. surplus of $105 million.
B. deficit of $5 million.
C. surplus of $100 million and a deficit of $105 million.
D. surplus of $5 million.
E. deficit of $105 million.

7.Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

(Might be B?)

A. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
B. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
C. The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
D. Both equilibrium price and equilibrium quantity would increase.

8.The Consumer Price Index (CPI) measures the changes of the

A. prices paid by all businesses for a fixed market basket of production resources.
B. quantities of a fixed market basket of goods produced by businesses.
C. lowest prices paid by consumers for a fixed market basket of consumer goods and services.
D. prices paid by consumers and businesses for a fixed market basket of goods and services.
E. prices paid by consumers for a fixed market basket of consumer goods and services.

9.For which of the following individuals would the opportunity cost of going to college be highest?

(I think it's c)

A. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball
B. a promising young mathematician who will command a high salary once she earns her college degree
C. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
D. a student with average grades who has never held a job

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