The benefit that Jack receives from consuming a pack of french fries is 10 utils. He expects a future health cost of eating french fries at 20 utils
If Jack discounts delayed utils with a weight of 1/4, should he consume french fries? Explain your answer.
Benefit that Jack receives from consuming french fries = 10 utils.
Cost that Jack expects to bear in the future if he consumes french fries = 20 utils
Present value of the future costs = 1/4 × 20 = 5 utils.
Net benefit = (10 - 5 ) = 5 utils.
Because the net benefit of consuming french fries is positive, Jack should consume french fries.
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