Author Question: When purchasing autos and other durable goods, consumers tend to use discount rates that are ... (Read 32 times)

DyllonKazuo · **on:** Jul 1, 2018

When purchasing autos and other durable goods, consumers tend to use discount rates that are inversely proportional to their income, so the discount rates are lower for consumers with higher income. The key reason for this behavior is that:

A) lower income consumers face very strict cash constraints, and they expect these problems to get worse in the future.
B) high income consumers tend to have lower opportunity costs for money.
C) high income consumers tend to make long-term investments (e.g., 30-year bonds), which always pay lower interest rates than short-term investments.
D) none of the above

Question 2

Refer to Figure 10.1. If the monopolist is not regulated, the price will be set at ________.

A) P1
B) P2
C) P3
D) P4
E) none of the above