Comparing Time Preferences
Consider two individuals, Alex and Ben. Their preferences for consumption today versus consumption in one year are such that all points on a single indifference curve provide them with the same level of satisfaction.
- Alex feels equally satisfied receiving $100 in one year as they do receiving $75 today.
- Ben feels equally satisfied receiving $100 in one year as they do receiving $60 today.
Analyze the preferences of both individuals. Which individual demonstrates a stronger preference for present consumption over future consumption? Justify your conclusion by explaining how the relationship between the present and future values for each person reveals their level of impatience.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
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