Skyscraper City has a subway system, for which a one-way fare is $1.50. There is pressure on the mayor to reduce the fare by one-third, to $1.00. The mayor is dismayed, thinking that this will mean Skyscraper City is losing one-third of its revenue from sales of subway tickets. The mayor’s economic adviser reminds her that she is focusing only on the price effect and ignoring the quantity effect. Explain why the mayor’s estimate of a one-third loss of revenue is likely to be an overestimate.
A 30-year mortgage for $95,000 is issued at a 9% nominal interest rate.
A: What is the monthly payment?
B: How long does it take to pay off the mortgage, if $1,000 per month is paid?
C: How long does it take to pay off the mortgage, if double payments are made?