You are considering two perpetuities which are identical in every way, except that perpetuity a will begin making annual payments of $p to you two years from today while the first $p payment for perpetuity b will occur one year from today. it must be true that the present value of perpetuity: a) a is greater than that of b by $p. b) b is greater than that of a by $p. c) b is equal to that of perpetuity a. d) a exceeds that of b by the pv of $p for one year. e) b exceeds that of a by the pv of $p for one year.

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?