The Following Figure Shows an Individual's Total Cost of Renting

question 28

Multiple Choice

The following figure shows an individual's total cost of renting four apartments located at different distances from her place of work.

-Refer to the figure above.Other things remaining the same,assume that the individual now has a higher opportunity cost of time.Which of the following statements is true in this context?

• A) The cost curve will move up.
• B) The cost curve will move down.
• C) Optimization using total value will not lead to an efficient outcome.
• D) Optimization using marginal analysis will not lead to an efficient outcome.

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, commonly used to appraise long-term projects.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis. It reflects the opportunity cost of capital.

Present Value

The value at present of future cash receipts or a lump sum, taking into consideration a specified rate of return.

Future Value

The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today, taking into account interest or return on investment.