You Have $20,000 of Current Income and $45,000 of Future

question 20

Multiple Choice

You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is

• A)-1.02.
• B)-1.00.
• C)-1.80.
• D)0.80.

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Definitions:

Direct Labor Costs

Expenses associated with employees who directly contribute to the production of goods or services.

Work in Process Inventory

Goods partially completed by a manufacturer but not yet ready for sale.

Administrative Expenses

Costs associated with the general management and administration of an organization, rather than production or sales.

Selling Expenses

Costs associated with the selling of a company's products or services, including advertising, sales commissions, and store maintenance.