in the future, turn on how one compares present costs of pollution control with long-run future benefits.

Someone who wins the lottery and is scheduled to receive a string of payments over 30 years might be

interested in knowing what the present discounted value is of those payments. Whenever a string of costs and

benefits stretches from the present into different times in the future, present discounted value becomes an

indispensable tool of analysis.
536 C • Present Discounted Value

Access for free at openstax.org
537

ANSWER KEY

Chapter 1

1. Scarcity means human wants for goods and services exceed the available supply. Supply is limited

because resources are limited. Demand, however, is virtually unlimited. Whatever the supply, it seems

human nature to want more.

2. 100 people / 10 people per ham = a maximum of 10 hams per month if all residents produce ham. Since

consumption is limited by production, the maximum number of hams residents could consume per

month is 10.
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