If People Have a Positive Rate of Time Preference, They

question 166

Multiple Choice

If people have a positive rate of time preference, they

• A)must be rewarded for saving
• B)are willing to pay more for a good that saves them money if they hold on to it a long time
• C)prefer to consume in the future when things are cheaper
• D)prefer time deposits to savings accounts
• E)prefer leisure over labor

Grasp the concept of economic welfare and how it is affected by taxation.

Understand the influence of taxes on the equilibrium quantity of goods.

Identify the per-unit burden of taxation on sellers and buyers.

Recognize the relationship between the size of a tax and its resulting deadweight loss.

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Definitions:

Marginal Cost

The increase in cost that results from producing one additional unit of a good or service.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance, providing a base cost for operating a business.

Total Cost

The sum of all funds utilized in the production of goods or services, including both fixed and variable costs.

Marginal Cost

The rise in overall manufacturing expenses resulting from the creation of an extra unit.