An Individual Who Is Considering Consumption Between Two Time Periods

question 49

Multiple Choice

An individual who is considering consumption between two time periods (year 1 and year 2) has an endowment of $20,000 in year 1 and $15,000 in year 2.If the interest rate is 5 percent,what is the maximum approximate amount that can be spent on consumption in year 1?

• A)$35,000
• B)$20,000
• C)$35,750
• D)$34,250

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Definitions:

Thorndike

An American psychologist known for his work in the field of learning, particularly the law of effect.

Skinner

Refers to B.F. Skinner, a psychologist and behaviorist who developed the theory of operant conditioning, focusing on the consequences of behavior to shape future actions.

Primary Reinforcer

A stimulus that is naturally rewarding and satisfies a basic biological need, such as food or water.

Biological Need

Basic physical requirements for human survival, such as food, water, air, shelter, and sleep, that are essential for maintaining health and well-being.