Can Different Discount Rates Be Used for Different Stages in a Decision

question 21

Essay

Can different discount rates be used for different stages in a decision tree?
If so,what would be the benefit of such action?

---

Definitions:

Marginal Cost

The increase in cost resulting from the production of one additional unit of a good or service.

Fixed Input

An input whose quantity is constant and cannot be changed in the short run.

Short Run

A period in economics during which some factors of production are fixed, limiting the ability of a business to fully adjust to market changes.

Long Run

An economic term referring to a period during which all inputs or factors of production can be varied, and there are no fixed constraints.