According to the life-cycle hypothesis,
A) the present value of lifetime consumption equals the future 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.
D
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Cheese is priced at $5 per pound and wine at $10 per bottle. A consumer who enjoys both cheese and wine will not be in consumer equilibrium until the marginal utility of a pound of cheese is:
a. four times that of wine. b. one-fourth that of wine. c. two times that of wine. d. one-half that of wine.
Predictions of severe shortages due to impending natural resource depletion
a. are widely accepted by resource economists even though such predictions are a relatively new occurrence. b. have been wrong in the past, but most resource economists believe that the threat of resource depletion is now far more severe than ever before. c. are typically made without adequate recognition and consideration of resource price elasticities. d. typically assume that price elasticities are greater than they really are.