S2W8

Consider Doc Hudson is looking for tyres, which has a demand curve t = 12 - 2L and a supply curve t = 4L. How many tyres will Doc Hudson purchase and what will it cost him?

• Purchase 2 tyres, pay £8/tyre

• Purcahse 4 tyres, pay £6/tyre

• Purchase 6 tyres, pay £4/tyre

• Purchase 8 tyres, pay £2/tyre

You're considering purchasing a special type of fuel. One fuel costs £5 and lasts for 1 month, while another, priced at £7, lasts for 2 months. Which option offers the better deal considering both price and duration?

• £5 for 1 month

• £7 for 1 month

• £5 for 2 months

• £7 for 2 months

You're Lightning McQueen, and you've inherited £600,000. You're torn between two investment options: purchasing a whimsical new car coat (cost £6000) or investing in a government bonds, which option should you choose?

• Purchase new car coat

• Invest in government bonds

• Purchase the car coat but invest half of the remaining cash in shares

• Invest half of the cash in shares and keep the rest for emergencies

You are building guest pit stops at a racing resort, and you need to choose whether to construct your pits out of piston steel, alloy, or carbon fiber. They differ only in terms of durability and cost

Carbon Fiber: £2,500 (10% depreciation)

Alloy: £1,000 (15% depreciation)

Piston Steel: £2,000 (20% depreciation)

If the interest rate is 5%, which type of pit stop should you buy?

• Alloy

• Piston Steel

• Carbon Fiber

Sally owns Cozy Cones Motel in Radiator springs. She would rather leave a room in the motel empty than let someone stay in it for £50. If she can get £150 for the room how much is the economic rent?

It is important that Doc Hudson teach Lightning about economics to develop his racing strategy.
Please help Doc explain the definition of real capital

Now help Doc Hudson explain the definition of financial capital

You pursue a career at the Piston Racing Series. Assuming your career is intensive, you have no free time and your life is divided into working life and retirement (hence only two periods). Each year of your working life you earn £80,000, received at the start of the year, and the interest rate is 5% per period. Round all values to integers and find PV of current, future, and lifetime income.

• PV of current income: £80,000
  PV of future income: £76,190
  PV of lifetime income:
  £156,190

• PV of current income: £80,000
  PV of future income: £74,230
  PV of lifetime income:
  £154,230

• PV of current income: £80,000
  PV of future income: £78,990
  PV of lifetime income:
  £158990

Lightning McQueen and Mater each invest £1000 for 30 racing seasons. Both receive a gross (pre-fee) return of 6% per season. However, Lightning McQueen pays a 1% per season fee to a passive fund, while Mater pays a 1.5% per season fee to an active pit crew manager. How much will Lightning McQueen and Mater have at the end of three decades and who has more?

• Lightning McQueen: £1678
  Mater: £2096
  
  Mater would have more money.

• Lightning McQueen: £1755
  Mater: £1878
  
  Mater would have more money

• Lightning McQueen: £2096
  Mater: £1678
  
  Lightning McQueen would have more money

• 
  Lightning McQueen: £1878
  Mater: £1755
  
  Lightning McQueen would have more money.

Suppose that a rare fuel resource, facing a constant demand, will be exhausted in 10 years. If an alternative fuel will be available (in 10 years) at a price of £1000, what must the price of the fuel resource be today if the interest rate is 5%?

• £512.23

• £673.67

• £614.46

• £897.32