An individual may borrow a certain sum of money from any of the three
An individual may borrow a certain sum of money from any of the three banks in his town.
Bank 1 offers him loans at an annual rate of 5%, Bank 2 offers him loans at an annual rate of 3% per year, and Bank 3 offers him a loan at an annual rate of interest of 10%. A rational individual will:
A) borrow from Bank 2.
B) borrow from Bank 1.
C) borrow from Bank 3.
D) be indifferent about borrowing from any of the three banks.
ANSWER
A
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