If people prefer to consume goods now rather than in the future, how does anyone save money?
Generally, people are rewarded for saving in the form of interest payments. This gives a monetary benefit for saving. Further, as one's income and consumption expand, there will likely be diminishing marginal utility in additional consumption. Thus, at some point, people might choose future consumption over present consumption. People also save in anticipation of times when their income might be eliminated or reduced, such as in unemployment and retirement. Finally, people might save because they receive utility by knowing they will leave their children (or even their former college) an inheritance.
You might also like to view...
The extra cost associated with undertaking an activity is called
A) opportunity cost. B) foregone cost. C) marginal cost. D) net loss.
"Supply curves are upward sloping" is a graphical way of saying
a. supply equals demand b. price and quantity supplied are inversely related c. price and quantity demanded are directly related d. price and quantity supplied are directly related e. price and quantity demanded are inversely related
Adverse selection occurs in the health insurance market because:
A. it is difficult for insurance companies to distinguish between high risk and low risk customers. B. people cannot predict their future health status. C. the least healthy people are the least likely to acquire insurance. D. health care markets are unregulated.
Which of the following would we expect to have the highest poverty rate?
A. White households headed by males. B. Elderly white households. C. White households headed by females. D. African-American households headed by females.