Why Is a Dollar Today More Valuable Than a Dollar

question 187

Multiple Choice

Why is a dollar today more valuable than a dollar a year from now?

• A)The dollar today can be immediately used to buy something.
• B)A dollar a year from now will likely have less purchasing power because of inflation.
• C)The unknown future is riskier than the known present.
• D)All of these

---

Definitions:

ATC

Average Total Cost, the sum of all production costs divided by the quantity of output produced, reflecting the average cost per unit of output.

AVC

Average Variable Cost is the total variable cost per unit of output, which is calculated by dividing total variable costs by the quantity of output.

MC

Marginal Cost, the increase or decrease in the total cost of a production run for making one additional unit of an item.

Long Run

A period in economic analysis where all factors of production can be varied, and no inputs are fixed.