Intertemporal Choice Requires Knowledge Of

question 92

Multiple Choice

Intertemporal choice requires knowledge of:

• A)prices and interest rates in all future time periods.
• B)the present value of future receipts and expenditures.
• C)the consumer's expected lifetime income.
• D)prices and interest rates in selected future time periods.

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Definitions:

Marginal Product (MP)

The extra output generated from increasing the quantity of a particular input by one, while keeping other inputs unchanged.

Price (P)

The cost necessary to acquire a good or service.

Value of the Marginal Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital, in the production process.

Factor's Price

The payment for the use of a factor of production, such as wages for labor, rent for land, or interest on capital.