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

The monthly demand equation for an electric utility company is estimated to be p equals 60 minus left parenthesis 10 superscript negative 5 baseline right parenthesis x, where p is measured in dollars and x is measured in thousands of killowatt-hours. the utility has fixed costs of $3 comma 000 comma 000 per month and variable costs of $32 per 1000 kilowatt-hours of electricity generated, so the cost function is upper c left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 32 x. (a) find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (b) suppose that the rising fuel costs increase the utility's variable costs from $32 to $38, so its new cost function is upper c 1 left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 38 x. should the utility pass all this increase of $6 per thousand kilowatt-hours on to the consumers?