The Four Most Fundamental Factors That Affect the Cost of Money

question 21

True/False

The four most fundamental factors that affect the cost of money are (1)production opportunities, (2)time preferences for consumption, (3)risk,and (4)weather conditions.

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Definitions:

Long Run

A period of time in economics where all factors of production and costs are variable, allowing for complete adjustment to changes in market conditions.

Fixed Resource

An asset or input whose quantity cannot be altered in the short run for the production of goods and services.

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used by a business, easily identifiable and recorded.

Entrepreneurial Talent

The unique set of skills, insight, and intuition possessed by individuals that enables them to identify and exploit new business opportunities.