Exam 19: Economic Inequality

Sue has human capital worth $500,000 and nonhuman capital of $100,000. Todd has human capital worth $10,000 and nonhuman capital of $50,000. The return on each type of capital is 10 percent a year. Sue's income is ________ and Todd's income is ________.

In the country of Konswano there are 4 people. Each person lives for 40 years. In their first 10 years, they earn no income. In the next 20 years, they earn $40,000 per year and in the last 10 years they earn no income. Each year their consumption is $20,000. If the people in Konswano are aged 5, 15, 25, and 35, then the distribution of annual income ________.

-The table above gives cumulative percent of income received by each 20 percent group of households. Label the axes in the figure above and then plot the Lorenz curves. In which nation is income more equally distributed?

-Alice, Bob, and Cody live in Wesland. Their annual incomes and the amounts they pay in income tax are shown in the table below. The income tax in Wesland is

What is a Lorenz curve and what does it show?

The median wage among physicians is over $166K a year, while the median salary for physician assistants is $86K a year. These salaries suggest that physicians have ________ human capital than physician assistants and hence the demand for labor for physicians is ________ than the demand for labor for physician assistants.

In the United States, the poorest 50 percent of households own about ________ of total wealth.

-Using the table provided above to construct Lorenz curves representing 1990 and 2011, what do you discover and how is this interpreted?

One way the United States has tried to encourage welfare recipients to acquire human capital is by

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. The figure shows that high-skilled workers earn a wage rate greater than low-skilled workers because

What effect does the age of a household have when estimating the degree of inequality in income among households?

Income (percent of total) -The table shows income distributions in the United States and Canada in a recent year. a) Draw a Lorenz curve for the United States. According to your graph, what is the percentage of income received by the poorest 30 percent of households? The richest 10 percent? b) On the same graph, draw a Lorenz curve for Canada. According to your graph, what is the percentage of income received by the poorest 30 percent of households? The richest 10 percent? c) Draw the line of equality. How is it related to the Lorenz curve? d) Is income distributed more equally in the United States or in Canada? Which country's Gini ratio is closer to zero? Explain your answers.

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage differential between high-skilled and low-skilled labor is

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals

State colleges are an example of

Social security provides payments

The mean (average) U.S. family income in 2012 was approximately

A flat-rate income tax is also called ________.

-In the figure above, if the government starts to provide university education at no charge, in the long run, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________.

-The above figure shows the Lorenz curve for wealth for the nation of Rusha. The wealthiest forty percent of the population own what percent of wealth?