Question 1

The ________ explains that the redistribution of income occurs because ________.

Accepted Answer

A)  median voter theory; a political party is more likely to retain power by enacting laws that make its supporters as well off as possible 
B)  utilitarian theory; the big tradeoff favors efficiency 
C)  excess burden theory; utilitarianism favors equality over efficiency 
D)  Lorenz curve; the lowest quintile of households receives the smallest level of benefits 
E)  progressive tax theory; higher taxes are best at equalizing income 
A)  median voter theory; a political party is more likely to retain power by enacting laws that make its supporters as well off as possible 
B)  utilitarian theory; the big tradeoff favors efficiency 
C)  excess burden theory; utilitarianism favors equality over efficiency 
D)  Lorenz curve; the lowest quintile of households receives the smallest level of benefits 
E)  progressive tax theory; higher taxes are best at equalizing income

Question 2

If all households in a nation receive the same income,the nation's Lorenz curve

Accepted Answer

A)  is horizontal. 
B)  is vertical. 
C)  is a 45° line. 
D)  runs along the horizontal axis until it reaches 50 percent of households and then runs vertically up to 100 percent of income. 
E)  runs along the horizontal axis until it reaches 100 percent of households and then runs vertically up to 100 percent of income. 
A)  is horizontal. 
B)  is vertical. 
C)  is a 45° line. 
D)  runs along the horizontal axis until it reaches 50 percent of households and then runs vertically up to 100 percent of income. 
E)  runs along the horizontal axis until it reaches 100 percent of households and then runs vertically up to 100 percent of income.

Question 3

In the United States in 2010,the Census Bureau determined that approximately ________ million Americans lived in households that had incomes below the poverty line.

Accepted Answer

A)  46 
B)  22 
C)  84 
D)  11 
E)  112 
A)  46 
B)  22 
C)  84 
D)  11 
E)  112

Question 4

In the United States,since 1970 the share of income received by the richest 20 percent of households has ________ and the share received by the other 80 percent of households has ________.

Accepted Answer

A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  not changed; not changed 
E)  increased; not changed 
A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  not changed; not changed 
E)  increased; not changed

Question 5

Which of the following is true? At a given quantity of employment,if the
i.value of marginal product of a high-skill worker is $35 and the value of marginal product of a low-skill worker is $10,the value of marginal product of the skill is $25.
ii.value of marginal product of a high-skill worker is $35 and the value of marginal product of a low-skill worker is $10,the cost of acquiring the skill is $25.
iii.value of marginal product of a skill is $25,then the wage rate must be $25.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 6

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers.
-In the figure above,the compensation for the cost of acquiring the skill creates the difference between the ________ curves and ________.

Accepted Answer

A)  SL and SH; is equal to $10 per hour 
B)  SL and SH; is less than $10 per hour 
C)  DL and DH; is less than $10 per hour 
D)  DL and DH; is equal to $10 per hour 
E)  SL and SH; exceeds $10 per hour 
A)  SL and SH; is equal to $10 per hour 
B)  SL and SH; is less than $10 per hour 
C)  DL and DH; is less than $10 per hour 
D)  DL and DH; is equal to $10 per hour 
E)  SL and SH; exceeds $10 per hour

Question 7

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Accepted Answer

The poorest 20 perce

Question 8

Looking at wage differentials between white women and white men in the United States since 2000,we see that the amount of the difference

Accepted Answer

A)  has not changed. 
B)  has increased. 
C)  has decreased. 
D)  at first increased but in the last decade it decreased. 
E)  at first decreased but in the last decade it increased. 
A)  has not changed. 
B)  has increased. 
C)  has decreased. 
D)  at first increased but in the last decade it decreased. 
E)  at first decreased but in the last decade it increased.

Question 9

Which of the following is correct? On the average,
i.the wage differential between white males and white females has narrowed since 2000.
ii.black females are paid more than black males.
iii.Hispanic males are paid more than black males.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii

Question 10

-The above table shows the distribution of income in two countries,Alpha and Beta.Based on these distributions of income,

Accepted Answer

A)  Country Beta has more equal income distribution than does Country Alpha. 
B)  both countries have equal distributions because 100 percent of the incomes are accounted for. 
C)  the Lorenz Curve for country Beta is closer to the line of equality. 
D)  Country Alpha has a more equal distribution of income than does Country Beta. 
E)  It is impossible to answer the question without more information. 
A)  Country Beta has more equal income distribution than does Country Alpha. 
B)  both countries have equal distributions because 100 percent of the incomes are accounted for. 
C)  the Lorenz Curve for country Beta is closer to the line of equality. 
D)  Country Alpha has a more equal distribution of income than does Country Beta. 
E)  It is impossible to answer the question without more information.

Question 11

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
E)  100 
A)  20 
B)  40 
C)  60 
D)  80 
E)  100

Question 12

If discrimination against women decreases their value of marginal product,then women will have ________ wage rate than men and there will be ________ high-paying jobs for women.

Accepted Answer

A)  a lower; more 
B)  a higher; fewer 
C)  a lower; fewer 
D)  a higher; more 
E)  the same; fewer 
A)  a lower; more 
B)  a higher; fewer 
C)  a lower; fewer 
D)  a higher; more 
E)  the same; fewer

Question 13

The table gives the distribution of income in Miseria.
-What percent of income is earned by the richest forty percent?

Accepted Answer

A)  5 percent 
B)  20 percent 
C)  70 percent 
D)  55 percent 
E)  More information is needed to answer the question. 
A)  5 percent 
B)  20 percent 
C)  70 percent 
D)  55 percent 
E)  More information is needed to answer the question.

Question 14

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

Accepted Answer

A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage. 
E)  opportunity cost of acquiring skills. 
A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage. 
E)  opportunity cost of acquiring skills.

Question 15

Which of the following characterizes the negative income tax concept?

Accepted Answer

A)  It is a flat tax that lower-income households do not pay. 
B)  It is a progressive tax structure with enough deductions to provide refunds to some. 
C)  It is a regressive tax with low-income earners getting a refund back when taxes are filed. 
D)  It is a guaranteed annual income with earned incomes taxed at a flat rate. 
E)  It is an income tax that eliminates all the inefficiency that occurs with the current tax system. 
A)  It is a flat tax that lower-income households do not pay. 
B)  It is a progressive tax structure with enough deductions to provide refunds to some. 
C)  It is a regressive tax with low-income earners getting a refund back when taxes are filed. 
D)  It is a guaranteed annual income with earned incomes taxed at a flat rate. 
E)  It is an income tax that eliminates all the inefficiency that occurs with the current tax system.

Question 16

The ________ distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the ________.

Accepted Answer

A)  horizontal; value of marginal product of skill 
B)  horizontal; compensation for cost of acquiring skill 
C)  vertical; value of marginal product of skill 
D)  vertical; compensation for cost of acquiring skill 
E)  vertical; difference in the price of the product produced b y high-skilled labor minus the price of the product produced by low-skilled labor 
A)  horizontal; value of marginal product of skill 
B)  horizontal; compensation for cost of acquiring skill 
C)  vertical; value of marginal product of skill 
D)  vertical; compensation for cost of acquiring skill 
E)  vertical; difference in the price of the product produced b y high-skilled labor minus the price of the product produced by low-skilled labor

Question 17

Of all the characteristics that lead to income inequality,the factor with the largest impact is

Accepted Answer

A)  race. 
B)  sex. 
C)  age. 
D)  education. 
E)  location. 
A)  race. 
B)  sex. 
C)  age. 
D)  education. 
E)  location.

Question 18

Describe how a negative income tax works.

Accepted Answer

A negative income tax provides every hou

Question 19

The cost of acquiring a skill accounts for why the

Accepted Answer

A)  demand for high-skilled workers is different from the demand for low-skilled workers. 
B)  supply of high-skilled workers is different from the supply of low-skilled workers. 
C)  demand for high-skilled workers is different from the supply of high-skilled workers. 
D)  demand for high-skilled workers is different from the supply of low-skilled workers. 
E)  supply curves of high-skilled and low-skilled workers cross. 
A)  demand for high-skilled workers is different from the demand for low-skilled workers. 
B)  supply of high-skilled workers is different from the supply of low-skilled workers. 
C)  demand for high-skilled workers is different from the supply of high-skilled workers. 
D)  demand for high-skilled workers is different from the supply of low-skilled workers. 
E)  supply curves of high-skilled and low-skilled workers cross.

Question 20

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

Accepted Answer

A)  $16,000. 
B)  $22,000. 
C)  $26,000. 
D)  $24,000. 
E)  $10,000. 
A)  $16,000. 
B)  $22,000. 
C)  $26,000. 
D)  $24,000. 
E)  $10,000.

The explains that the redistribution of income occurs because .

If all households in a nation receive the same income,the nation's Lorenz curve

In the United States in 2010,the Census Bureau determined that approximately ________ million Americans lived in households that had incomes below the poverty line.

In the United States,since 1970 the share of income received by the richest 20 percent of households has and the share received by the other 80 percent of households has .

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the curves and .

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Looking at wage differentials between white women and white men in the United States since 2000,we see that the amount of the difference

Which of the following is correct? On the average, i.the wage differential between white males and white females has narrowed since 2000. ii.black females are paid more than black males. iii.Hispanic males are paid more than black males.

-The above table shows the distribution of income in two countries,Alpha and Beta.Based on these distributions of income,

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

If discrimination against women decreases their value of marginal product,then women will have wage rate than men and there will be high-paying jobs for women.

The table gives the distribution of income in Miseria. -What percent of income is earned by the richest forty percent?

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

Which of the following characterizes the negative income tax concept?

The distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the .

Of all the characteristics that lead to income inequality,the factor with the largest impact is

Describe how a negative income tax works.

The cost of acquiring a skill accounts for why the

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

Exam 20: Economic Inequality

The ________ explains that the redistribution of income occurs because ________.

If all households in a nation receive the same income,the nation's Lorenz curve

In the United States in 2010,the Census Bureau determined that approximately ________ million Americans lived in households that had incomes below the poverty line.

In the United States,since 1970 the share of income received by the richest 20 percent of households has ________ and the share received by the other 80 percent of households has ________.

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the ________ curves and ________.

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Looking at wage differentials between white women and white men in the United States since 2000,we see that the amount of the difference

Which of the following is correct? On the average, i.the wage differential between white males and white females has narrowed since 2000. ii.black females are paid more than black males. iii.Hispanic males are paid more than black males.

-The above table shows the distribution of income in two countries,Alpha and Beta.Based on these distributions of income,

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

If discrimination against women decreases their value of marginal product,then women will have ________ wage rate than men and there will be ________ high-paying jobs for women.

The table gives the distribution of income in Miseria. -What percent of income is earned by the richest forty percent?

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

Which of the following characterizes the negative income tax concept?

The ________ distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the ________.

Of all the characteristics that lead to income inequality,the factor with the largest impact is

Describe how a negative income tax works.

The cost of acquiring a skill accounts for why the

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

The explains that the redistribution of income occurs because .

In the United States,since 1970 the share of income received by the richest 20 percent of households has and the share received by the other 80 percent of households has .

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the curves and .

If discrimination against women decreases their value of marginal product,then women will have wage rate than men and there will be high-paying jobs for women.

The distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the .