Which of the Following Best Represents Time Preference

question 101

Multiple Choice

Which of the following best represents time preference?

• A) Sarah is spending $20,000 per year in tuition and other expenses to attend college with the hopes of earning a higher income in the future.
• B) Max saves $300 per month from his paychecks for retirement.
• C) Alex smokes a pack of cigarettes per day even though he knows that he may face poor health down the road because of his smoking habit.
• D) Thomas invests money in Apple today,which is subsequently used by Apple to fund additional investment purchases that will benefit future shareholders.

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Definitions:

Implicit and Explicit Costs

Implicit costs are indirect, non-monetary expenses related to the use of resources owned by the business, while explicit costs are direct, monetary payments for resources not owned by the firm.

Accounting Profit

The financial gain calculated by subtracting total explicit costs from total revenue, representing the net income reported on a company's financial statements.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as rent, salaries, and materials.

Economic Profits

The disparity between the amount a business earns in total and the sum of its outright and inferred expenses.