IN GEOMETRIC TERMS

M line according to its slope when that slope is compared,at any point, with the slope of the Willingness or W lines.We saw that, if we suppose him situated at a point on theM line at which the Willingness line drawn through thatpoint is steeper than the Market line, he will move awayfrom that point downward, along the M line, that is, hewill borrow; while, if situated where his W line is lesssteep than his M line he will move upward along the Mline, that is, he will lend.

Similar comparisons apply to our present problemmerely by substituting Opportunity line for Market line.Suppose Individual 1 to be situated, to start with, atOi on the Opportunity line, as shown on Chart 36. Hethen has the opportunity to shift to any other point onthat line as formerly he could shift along the Marketline. Let us, as before, proceed by small steps of $100each. The first step is from 0/ to 0/'. The chart indi-cates that, by sacrificing $100 of this year’s income, hecan add $150 to next year’s income, while he is willingto receive only $115 as indicated by his Willingness linedrawn through 0/. The $50 net return he will receiveis a 50 per cent rate of return over cost. This is his in-vestment opportunity rate. He is willing to lend $100for a net return of $15 or 15 per cent over cost. Thismeasures his degree of impatience or rate of time prefer-ence. Evidently, as just hinted, he will seize the opportu-nity to invest for a 50 per cent return when he would bewilling to take 15 per cent. This choice is represented onChart 36 by following the Opportunity line from 0/to O/'.

If, as a second step, another $100 can bring him $140while he would be willing to take $120, he will seize thatopportunity, too, and so move on to O"’. That is, he will

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