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an increase in the general level of prices that was not expected by most decision-makers
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- Law of Diminishing Marginal Utility
- The cost per unit of consumption changes with time periods
- Suppose pandora is deciding how to dispose of some hazardous waste. She can contain it safely at a cost of 175 or bury it in the local landfill. If she chose the second option, in ten years time the study will have seeped out enough to perm, ruin the vineyard of bacchus who lives next door to the landfill. The vineyard has a value to him in ten years of 450. This is the only damage of the hazardous waste will ever do. Assume there is inflation. What is the present value of 450 in ten years time at a discount rate of 10 percent