If the Marginal Utility to Juan of Sleeping an Extra

question 187

Multiple Choice

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,

• A)Juan is better off getting up at 8 a.m.
• B)Juan is better off getting up at 9 a.m.
• C)Juan's total utility from sleeping must be negative.
• D)Juan's average utility from every hour he sleeps must be negative.

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Definitions:

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing and the true yield on investments.

Equilibrium Interest Rate

The interest rate at which the demand for funds (borrowing) equates with the supply of funds (savings) in the financial market.

Demand for Loanable Funds

The desire for borrowing money, driven by the need for investment funds across the economy.