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Show That a Person Will Always Prefer Receiving an Extra

question 90

Essay

Show that a person will always prefer receiving an extra $1000 this year rather than an extra $1000 next year. (Assume there are no taxes, no inflation and the interest rate is positive and constant.)


Definitions:

Competition

Rivalry among business firms for resources and customers.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service more efficiently than its competitors when using the same amount of resources.

Opportunity Cost

The benefit that is missed or given up when choosing one alternative over another.

Comparative Advantage

Comparative advantage occurs when a country can produce a good at a lower opportunity cost than another country.

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