People engage in intertemporal substitution because they:
A) wish to reduce the overall number of hours they work.
B) seek to maximize their well-being.
C) are irrational.
D) always prefer leisure to work.

Question

Quizplus · Accepted Answer

Intertemporal substitution refers to the idea that people may choose to consume or invest assets at different points in time in order to maximize their overall well-being. Therefore, B is the best choice since individuals engage in intertemporal substitution to increase their utility or happiness. Choices A, C, and D are incorrect as they do not accurately explain the concept of intertemporal substitution.

People Engage in Intertemporal Substitution Because They