The opportunity cost of postponing income to some future time depends on the interest rate.

Question

Quizplus · Accepted Answer

The opportunity cost of postponing income to some future time is the interest that could have been earned if the income were invested or saved instead. Therefore, the opportunity cost is directly tied to the interest rate. If the interest rate is high, the opportunity cost of postponing income is also high. If the interest rate is low, the opportunity cost is also low.

The Opportunity Cost of Postponing Income to Some Future Time