Chapter 6, Problem 2FPA

a.

Summary Introduction

To explain:

Whether the payment for purchase has been made through cash or not.

Introduction:
Consumer credit refers to the arrangement of consuming goods and service without making any payment for them at the time of purchasing but sometime in the near future. It may include a component of interest if the payment has not been made till some specific time period.

b.

Summary Introduction

To explain:

The opportunity cost associated with the payment through cash.

Introduction:
Opportunity cost refers to the cost which is due to the loss of the benefit because of the choice of the other project or other thing. It is the profit that is known and cannot be achieved due to the selection of other opportunity.

c.

Summary Introduction

To explain:

Whether the payment for purchase has been made through credit.

d.

Summary Introduction

To explain:

The financial and psychological opportunity cost associated with using credit.