According to Friedman, the apparent conflict between cross-section data which shows a saving rate that varies with income group and time-series data which shows that the saving ratio over the past century is fairly constant is resolved by
A) pointing out that cross-section and time-series data are not comparable.
B) interpreting the low saving of poor people as due to the fact that they must buy necessities.
C) interpreting the high saving of rich people as due to the transitory nature of much income earned by the rich.
D) distinguished between a permanent marginal propensity to consume and a transitory marginal propensity to consume.
C
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A firm is making zero economic profits. From this, we know that
A) the firm is going to go out of business. B) implicit costs are zero. C) the firm is going to stay in business, but will not be able to attract new financial capital. D) the firm will stay in business since it is covering all relevant opportunity costs.
Assume that there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?
A) The supply of hybrid automobiles is greater than the demand for hybrid automobiles. B) Some consumers will be unable to obtain hybrid automobiles at the market price and will have an incentive to offer to buy the product at a higher price. C) The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease. D) The surplus will cause an increase in the equilibrium price of hybrid automobiles.