In Equilibrium, the Marginal Rate of Time Preference Is Equal

question 5

Multiple Choice

In equilibrium, the marginal rate of time preference is equal to:

• A)1/(1 + i).
• B)1/i.
• C)1 + i.
• D)i.

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Definitions:

Output

The amount of product or service produced by a company, industry, or economy within a specific period.

Average Variable Cost

The sum of all variable production costs divided by the number of units produced.

Profit-Maximizing

The strategy or process by which a company determines the price and output level that generates the most profit.

Mutual Interdependence

A condition in which entities are mutually reliant on each other, commonly seen in markets where actions of one firm significantly affect others.