Jan Is a Hyperbolic Discounter

question 1

Multiple Choice

Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only weight .5 on utility earned in future periods. In period 1 she comes up with a plan,which involves taking some action that leads to a loss of C utils in period 2 but provides a benefit of B utils in period 3. What values of B and C will lead her to behave inconsistently and not follow through on her plans?

• A)C < B < 2C.
• B)B < C.
• C)B > 2C.
• D)B < C < 2B.

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Definitions:

Incurred Costs

Expenses that a company has recognized or experienced, usually relating to the goods or services it has consumed or utilized.

Direct Costs

Costs that can be directly traced to the production of specific goods or services, such as raw materials and labor directly involved in manufacturing.

Hand-Painted Clay Figurines

Decorative or collectible items made of clay and finished with hand-applied paint details, often representing characters or scenes.

Fixed Manufacturing Cost

A type of cost that does not change with the level of production output, including costs like rent, salaries, and insurance.