Consider a three-year car loan. The price of the car is $10,000. The interest rate is 5% for the first year but is 10% for the remaining years. What should be the (fixed) annual payment?

1. A market in which there is an additional transaction that would benefit a buyer, a seller, and any third parties affected by the transaction is called

A. a free market

B. a contestable market

C. an efficient market

D. an inefficient market

E. a lucrative market

2. In the case of spillover benefits or costs,

A. the free market yields the efficient outcome

B. the free market yields an inefficient outcome

C. the free market no longer equates marginal private benefits to marginal private costs

D. the market must be imperfectly competitive

E. none of the above