Jermaine Wants to Open His Own Repair Shop, and Is

question 127

Multiple Choice

Jermaine wants to open his own repair shop, and is considering using his savings of $30,000 to get it started. He is currently earning 3 percent interest on his savings. However, Jermaine's friend Bob wishes to borrow the $30,000 to start up a bagel shop, offering to pay Jermaine 5 percent interest if he loans out the money. If Jermaine were to use the money to open his repair shop, rather than loan it to Bob, how can he accurately account for his costs?

• A)Jermaine must consider the $900 in forgone interest on his savings as an implicit cost.
• B)Jermaine must consider the $1,500 in forgone interest from loaning the money to Bob as an implicit cost.
• C)Jermaine must consider the $900 in forgone interest on his savings as an explicit cost.
• D)Jermaine must consider the $1,500 in forgone interest from loaning the money to Bob as an explicit cost.

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Definitions:

Maslow

Refers to Abraham Maslow, an American psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Bandura

Refers to Albert Bandura, a psychologist known for his social learning theory, emphasizing the role of observational learning, self-efficacy, and reciprocal determinism.

Deci And Ryan

Psychologists who are known for their development of the Self-Determination Theory, which focuses on different types of motivation and the roles they play in influencing behavior.

Extrinsic Factors

External elements or influences that affect behavior, motivation, or attitudes, and are not inherent to the individual.