Question

Harold would be equally happy with receiving $95 today or $100 one year from today. Harold's friend Maud would bejust as happy receiving $90 today or $100 one year from today. Based on this information, which of the following best describes the difference between Harold and Maud?a. Harold has a higher rate of time preference than Maud.b. Maud has a higher rate of time preference than Harold.c. Maud is poorer than Harold.d. Harold is older than Maud

Answer 1

Answer:

Maud has a higher rate of time preference than Harold

Explanation:

People with a higher rate of time preference are focused more on their present and the immediate future comfort  than other people.

When rate of time preference is higher the person is willing to give more on what they received in order to receive the benefit before.

Answer 2

Answer:

.b. Maud has a higher rate of time preference than Harold

Explanation:

HAROLD MAUD

i=C*i*t i=C*i*t

5=95*I*1 5=90*I*1

I=5/95 I=10/90

 

5,26% 11,11%