Short Essay Questions (500 words and 1 reference each)
- Suppose you invest $5,000 for 5 years. The interest rate for the first 2 years is 4.7%, 5.2% for year 3 and 5.4% for the final 2 years. Assuming interest compounds annually, what would your investment have returned in those 5 years?
- Suppose the wiz-pop market is in long-run equilibrium. Suddenly, fixed costs decrease, although variable costs remain unchanged. Discuss the short-run and long-run changes in market equilibrium.