The observation of high business activity in the Christmas season and low business activity immediately after Christmas is an example of:
A) irreversible investments.
B) high labor adjustment costs.
C) time bunching.
D) intertemporal substitution.

Question

Quizplus · Accepted Answer

Time bunching refers to the clustering of economic activity within a certain time period, such as the high business activity during the Christmas season. The low business activity immediately after Christmas is also an example of time bunching, as consumers are less likely to spend money after the holiday season. This is not related to irreversible investments or high labor adjustment costs. Intertemporal substitution refers to the ability of consumers to shift their consumption choices over time in response to changes in prices or income levels.

The Observation of High Business Activity in the Christmas Season