. Question 2 [20 marks]
(a) Explain what is meant by inter-temporal choice. (5)
(b) Draw and explain an inter-temporal budget constraint. (5)
(c) Use the indifference curve approach to derive the Marshallian demand curve (10)
NB!! please answer B&C
Inter-temporal choice is an economic term describing how an
individual's current decisions affect what options become available
in the future. Theoretically, by not consuming today, consumption
levels could increase significantly in the future, and vice
versa.
For individuals, these decisions relate more to saving and
retirement, while for firms, various investment decisions involve
inter-temporal choice. For example, an individual who saves today
consumes less, causing his or her current utility to decline. Over
time, the savings grow, increasing the number of goods the
individual can consume and, therefore, the person's future
utility.
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