An Individual Has $60,000 Income in Period 0 and $30,000

question 11

Multiple Choice

An individual has $60,000 income in period 0 and $30,000 income in period 1. If the individual desires to consume $19,000 in period 1 and the market interest rate is 8%, what is the maximum amount of consumption in period 0?

• A) $50,000
• B) $70,185
• C) $71,000
• D) $61,880

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Definitions:

Negative Profits

A financial condition also known as losses, occurring when a company's expenses exceed its revenues.

Profit-Maximizing

The strategic process used by businesses to determine the price and output level that generates the most profit.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period of time.

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust to meet changes in the market.