The amount people are willing to pay to drink a bottle of a certain certain vint

ID: 1098837 • Letter: T

Question

The amount people are willing to pay to drink a bottle of a certain certain vintage of wine

when it is t years old is $2+ 3t. It costs $.50 a bottle per year to store this wine. The interest rate

is 5%. If the annual cost of storing the wine rises to $1, what will be the eect on the price of

this wine when it is consumed and on the length of time for which it is stored before it is consumed? (show work or explain)

(a) Both will rise.

(b) Both will fall.

(d) The price will not change but the time for which it is stored will fall.

(e) The price will rise and the time for which it is stored will stay constant.

The amount people are willing to pay to drink a bottle of a certain certain vintage of wine

when it is t years old is $2+ 3t. It costs $.50 a bottle per year to store this wine. The interest rate

is 5%. If the annual cost of storing the wine rises to $1, what will be the eect on the price of

this wine when it is consumed and on the length of time for which it is stored before it is consumed? (show work or explain)

(b) Both will fall.

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