A Positive Rate of Time Preference Implies That a Person

question 47

Multiple Choice

A positive rate of time preference implies that a person would value

• A) receiving $100 today more than receiving $100 one year from now.
• B) receiving $100 today less than receiving $100 one year from now.
• C) receiving $100 today equally to receiving $100 one year from now.
• D) any amount, no matter how small, today more than receiving $100 one year from now.

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Definitions:

Coase Theorem

Suggests that if property rights are clearly defined and transaction costs are low, parties will negotiate to solve externalities on their own.

Externalities

Costs or benefits that affect a party who did not choose to incur that cost or benefit, often leading to market failures.

Private Sector

The part of the economy that is run by individuals and companies for profit and is not state controlled.

Transaction Costs

Transaction costs are the expenses incurred in buying or selling goods or services, which can include search and information costs, bargaining costs, and enforcement costs.