Examples of Precommitments to Deal with People's Time Inconsistency Problems

question 280

Multiple Choice

Examples of precommitments to deal with people's time inconsistency problems include the following, except

• A)automatic payroll deductions.
• B)debit card accounts.
• C)early withdrawal penalties.
• D)salary smoothing.

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Definitions:

Zero Economic Profits

A situation where a firm's total revenues exactly equal its total costs, leading to no net profit or loss after considering both explicit and implicit costs.

Normal Profits

An economic condition where a firm's total revenue is equal to its total costs, allowing it to cover all its opportunity costs.

Shutdown Point

The point in business operations where the revenue from the sale of goods or services is equal to the variable costs, beyond which the business would incur losses.

Break-Even Point

An output at which a firm makes a normal profit (total revenue = total cost) but not an economic profit.