Question 1

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. High-skilled workers earn a wage rate of

Accepted Answer

A)  $15 per hour. 
B)  $12 per hour. 
C)  $9 per hour. 
D)  $6 per hour. 
A)  $15 per hour. 
B)  $12 per hour. 
C)  $9 per hour. 
D)  $6 per hour.

Question 2

-In the figure above, 10 percent of income in country A is distributed to the

Accepted Answer

A)  richest 10 percent of the households. 
B)  poorest 10 percent of the households. 
C)  richest 30 percent of the households. 
D)  poorest 30 percent of the households. 
A)  richest 10 percent of the households. 
B)  poorest 10 percent of the households. 
C)  richest 30 percent of the households. 
D)  poorest 30 percent of the households.

Question 3

With respect to redistribution, one reason "The Big Tradeoff" exists is because

Accepted Answer

A)  low income households do not pay enough taxes. 
B)  government policymakers must choose between funding the various programs. 
C)  government programs only employ resources that had no value to society otherwise. 
D)  redistribution weakens the incentive to work. 
A)  low income households do not pay enough taxes. 
B)  government policymakers must choose between funding the various programs. 
C)  government programs only employ resources that had no value to society otherwise. 
D)  redistribution weakens the incentive to work.

Question 4

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. Which of the following have the market changes sketched above have most likely NOT caused?

Accepted Answer

A)  Increased income inequality between rural and urban populations 
B)  A movement towards a bell-shaped distribution of income 
C)  An increased Gini ratio 
D)  The Lorenz curve for income to move further away to the line of equality 
A)  Increased income inequality between rural and urban populations 
B)  A movement towards a bell-shaped distribution of income 
C)  An increased Gini ratio 
D)  The Lorenz curve for income to move further away to the line of equality

Question 5

A tax is regressive if the average tax rate

Accepted Answer

A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is less than one. 
A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is less than one.

Question 6

-Using the table provided above, which of the following statements is TRUE?

Accepted Answer

A)  Income inequality is decreasing. 
B)  Incomes are increasing. 
C)  Incomes are decreasing. 
D)  Income inequality is increasing. 
A)  Income inequality is decreasing. 
B)  Incomes are increasing. 
C)  Incomes are decreasing. 
D)  Income inequality is increasing.

Question 7

What is the difference between wealth and income?

Accepted Answer

Wealth is a stock of assets, that is, we

Question 8

A Lorenz curve graphs the difference between money income and market income.

Accepted Answer

A) True 
 B)False

Question 9

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________.

Accepted Answer

A)  rise; fall 
B)  fall; rise 
C)  fall; fall 
D)  rise; rise 
A)  rise; fall 
B)  fall; rise 
C)  fall; fall 
D)  rise; rise

Question 10

In the United States the richest 20 percent of households receive about ________ of total income.

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  50 percent 
D)  80 percent 
A)  10 percent 
B)  20 percent 
C)  50 percent 
D)  80 percent

Question 11

If the area between the line of equality and the Lorenz curve is 1,250, and the entire area beneath the line of equality is 5,000, the Gini ratio is

Accepted Answer

A)  0.25. 
B)  4.00. 
C)  0.33. 
D)  0.80. 
A)  0.25. 
B)  4.00. 
C)  0.33. 
D)  0.80.

Question 12

The U.S. tax system

Accepted Answer

A)  reduces inequality and shifts the Lorenz curve away from the line of equality. 
B)  reduces inequality and shifts the Lorenz curve toward the line of equality. 
C)  increases inequality and shifts the Lorenz curve toward the line of equality. 
D)  increases inequality and shifts the Lorenz curve away from the line of equality. 
A)  reduces inequality and shifts the Lorenz curve away from the line of equality. 
B)  reduces inequality and shifts the Lorenz curve toward the line of equality. 
C)  increases inequality and shifts the Lorenz curve toward the line of equality. 
D)  increases inequality and shifts the Lorenz curve away from the line of equality.

Question 13

Considering the tax and transfer system in the United States, the poor receive

Accepted Answer

A)  less in benefits than they pay in taxes, and so do the rich. 
B)  more in benefits than they pay in taxes, and so do the rich. 
C)  less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. 
D)  more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes. 
A)  less in benefits than they pay in taxes, and so do the rich. 
B)  more in benefits than they pay in taxes, and so do the rich. 
C)  less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. 
D)  more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes.

Question 14

The median household income is

Accepted Answer

A)  the income that separates households into two equal groups. 
B)  the most common household income. 
C)  the mean household income. 
D)  the average household income. 
A)  the income that separates households into two equal groups. 
B)  the most common household income. 
C)  the mean household income. 
D)  the average household income.

Question 15

-In the above figure, the Lorenz curve for income is shown. If the data used are from the United States, and the U.S. Lorenz curve for wealth was added to the diagram, it would be

Accepted Answer

A)  further from the line of equality than the Lorenz curve for income. 
B)  closer to the line of equality than the Lorenz curve for income. 
C)  above the line of equality. 
D)  the same as the Lorenz curve for income. 
A)  further from the line of equality than the Lorenz curve for income. 
B)  closer to the line of equality than the Lorenz curve for income. 
C)  above the line of equality. 
D)  the same as the Lorenz curve for income.

Question 16

Wealth inequality persists across generations due, in part, to assortative mating.

Accepted Answer

A) True 
 B)False

Question 17

Moe's Sweaters is a firm in perfect competition. Moe's customers don't know who the firm's workers are. If Moe is the only employer in the market who discriminates against women by paying them less than he pays to equally qualified men, his firm will

Accepted Answer

A)  lower its labor cost and receive a greater economic economic profit than its competitors. 
B)  receive a positive economic profit while its competitors will only receive a normal profit. 
C)  not maximize its economic profit and will not survive. 
D)  be able to lower its price and undercut the competitors. 
A)  lower its labor cost and receive a greater economic economic profit than its competitors. 
B)  receive a positive economic profit while its competitors will only receive a normal profit. 
C)  not maximize its economic profit and will not survive. 
D)  be able to lower its price and undercut the competitors.

Question 18

-In the figure above, the richest 20 percent of all households receive what share of all income?

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  40 percent 
A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  40 percent

Question 19

-In the figure above, income

Accepted Answer

A)  is most equally distributed in country A. 
B)  is most equally distributed in country B. 
C)  is most equally distributed in country C. 
D)  is equally distributed in all three countries. 
A)  is most equally distributed in country A. 
B)  is most equally distributed in country B. 
C)  is most equally distributed in country C. 
D)  is equally distributed in all three countries.

Question 20

Which of the following CORRECTLY describes characteristics of people who earn high incomes? I. Older, retired households have the highest incomes.
II) Married couples earned higher incomes than single people.
III) Households with Bachelor's degrees have higher incomes than households with doctorate degrees.

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  II only 
A)  I and II 
B)  I and III 
C)  II and III 
D)  II only

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. High-skilled workers earn a wage rate of

-In the figure above, 10 percent of income in country A is distributed to the

With respect to redistribution, one reason "The Big Tradeoff" exists is because

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. Which of the following have the market changes sketched above have most likely NOT caused?

A tax is regressive if the average tax rate

-Using the table provided above, which of the following statements is TRUE?

What is the difference between wealth and income?

A Lorenz curve graphs the difference between money income and market income.

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will and the wage rate of low-skilled workers will .

In the United States the richest 20 percent of households receive about ________ of total income.

If the area between the line of equality and the Lorenz curve is 1,250, and the entire area beneath the line of equality is 5,000, the Gini ratio is

The U.S. tax system

Considering the tax and transfer system in the United States, the poor receive

The median household income is

-In the above figure, the Lorenz curve for income is shown. If the data used are from the United States, and the U.S. Lorenz curve for wealth was added to the diagram, it would be

Wealth inequality persists across generations due, in part, to assortative mating.

Moe's Sweaters is a firm in perfect competition. Moe's customers don't know who the firm's workers are. If Moe is the only employer in the market who discriminates against women by paying them less than he pays to equally qualified men, his firm will

-In the figure above, the richest 20 percent of all households receive what share of all income?

-In the figure above, income

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Uncertainty and Information

Filters

Exam 19: Economic Inequality

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. High-skilled workers earn a wage rate of

-In the figure above, 10 percent of income in country A is distributed to the

With respect to redistribution, one reason "The Big Tradeoff" exists is because

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. Which of the following have the market changes sketched above have most likely NOT caused?

A tax is regressive if the average tax rate

-Using the table provided above, which of the following statements is TRUE?

What is the difference between wealth and income?

A Lorenz curve graphs the difference between money income and market income.

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________.

In the United States the richest 20 percent of households receive about ________ of total income.

If the area between the line of equality and the Lorenz curve is 1,250, and the entire area beneath the line of equality is 5,000, the Gini ratio is

The U.S. tax system

Considering the tax and transfer system in the United States, the poor receive

The median household income is

-In the above figure, the Lorenz curve for income is shown. If the data used are from the United States, and the U.S. Lorenz curve for wealth was added to the diagram, it would be

Wealth inequality persists across generations due, in part, to assortative mating.

Moe's Sweaters is a firm in perfect competition. Moe's customers don't know who the firm's workers are. If Moe is the only employer in the market who discriminates against women by paying them less than he pays to equally qualified men, his firm will

-In the figure above, the richest 20 percent of all households receive what share of all income?

-In the figure above, income

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Uncertainty and Information

Filters

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will and the wage rate of low-skilled workers will .