According to the permanent-income hypothesis,
A) the present value of lifetime consumption equals the present value of lifetime income.
B) the income earned in a lifetime will be evenly divided between consumption and saving.
C) household consumption depends on income that households expect to receive each year, and financial markets are used to smooth consumption in response to changes in transitory income.
D) households use financial markets to transfer funds from periods when income is high to periods when income is low.
C
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If the demand curve for a good is a vertical line at Q = 1, then a decrease in the price of that good will:
A. decrease the quantity demanded. B. lead the quantity demanded to fall to zero. C. increase the quantity demanded. D. not change the quantity demanded.
Kaitlyn and Larissa have formed a dog bathing and grooming business business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The opportunity cost of grooming the third dog in a day is bathing ________ dog(s)
A) 3 B) 4 C) 5 D) 18
Figure 6-9
In 1983, government price supports raised the price of sugar above its equilibrium value. Which graph in Figure 6-9 illustrates the impact of sugar price supports on the sugar substitute fructose?
A. 1 B. 2 C. 3 D. 4
Countries of the world differ in terms of their
A) geographic size. B) population size. C) standards of living. D) All of the above.