Question 1

The gap between the salary of Tom Cruise and an unknown actor is over $15 million per movie.This difference means that Mr.Cruise's value of marginal product is

Accepted Answer

A)  over $15 million greater than the value of the marginal product of the unknown actor. 
B)  less than $15 greater than value of the marginal product of the unknown actor. 
C)  $15 million greater than the value of the marginal product of the unknown actor. 
D)  equal to the value of the marginal product of the unknown actor. 
E)  More information is need to make the comparison. 
A)  over $15 million greater than the value of the marginal product of the unknown actor. 
B)  less than $15 greater than value of the marginal product of the unknown actor. 
C)  $15 million greater than the value of the marginal product of the unknown actor. 
D)  equal to the value of the marginal product of the unknown actor. 
E)  More information is need to make the comparison.

Question 2

A government redistribution of income program is proposed with the aim of making the income distribution the same as the 45° line in a Lorenz curve diagram.What implications does the idea of the "big tradeoff" have for the program?

Accepted Answer

If the distribution of income was the sa

Question 3

The measured inequality of annual income ________ the actual inequality of lifetime income because ________.

Accepted Answer

A)  overstates; different households are at different stages in the life cycle 
B)  overstates; the Lorenz curves differ for income and wealth 
C)  understates; people live in different geographic areas 
D)  understates; people have different levels of education 
E)  overstates; different households have different amounts of wealth 
A)  overstates; different households are at different stages in the life cycle 
B)  overstates; the Lorenz curves differ for income and wealth 
C)  understates; people live in different geographic areas 
D)  understates; people have different levels of education 
E)  overstates; different households have different amounts of wealth

Question 4

Suppose the government implements a negative income tax with a minimum guaranteed income of $20,000 and a tax rate of 30 percent on market income.
a.What amount of tax would be paid by a household with no market income?
b.What amount of tax would be paid by a household earning $100,000 of market income?

Accepted Answer

a.A household with no market income woul

Question 5

Which of the following is correct about the United States?

Accepted Answer

A)  Income is equally distributed. 
B)  Wealth is equally distributed. 
C)  Income is equally distributed but wealth is unequally distributed because of inheritances. 
D)  Both wealth and income are unequally distributed. 
E)  Both wealth and income are equally distributed. 
A)  Income is equally distributed. 
B)  Wealth is equally distributed. 
C)  Income is equally distributed but wealth is unequally distributed because of inheritances. 
D)  Both wealth and income are unequally distributed. 
E)  Both wealth and income are equally distributed.

Question 6

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

Accepted Answer

A)  better educated. 
B)  less educated. 
C)  low-skilled workers. 
D)  middle class, that is the group in the middle 20 percent of the income distribution. 
E)  None of the above answers is correct because all groups benefited equally. 
A)  better educated. 
B)  less educated. 
C)  low-skilled workers. 
D)  middle class, that is the group in the middle 20 percent of the income distribution. 
E)  None of the above answers is correct because all groups benefited equally.

Question 7

Comparing the wealth and income distribution in the United States,we see that

Accepted Answer

A)  wealth is distributed less equally than income. 
B)  because wealth and income are different terms for the same thing, the distributions are the same. 
C)  income is distributed less equally than wealth. 
D)  we cannot compare the distribution of wealth and income. 
E)  None of the above answers is correct. 
A)  wealth is distributed less equally than income. 
B)  because wealth and income are different terms for the same thing, the distributions are the same. 
C)  income is distributed less equally than wealth. 
D)  we cannot compare the distribution of wealth and income. 
E)  None of the above answers is correct.

Question 8

In the United States,the richest 20 percent of households receive approximately ________ percent of total money income.

Accepted Answer

A)  33 
B)  12 
C)  50 
D)  75 
E)  20 
A)  33 
B)  12 
C)  50 
D)  75 
E)  20

Question 9

Skills are costly to acquire.What forms do these costs take?
i.out-of-pocket expenditures to pay for more education
ii.a higher value of marginal product
iii.forgone earnings while attending higher education

Accepted Answer

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

Question 10

In the United States,the

Accepted Answer

A)  distribution of income has become more equal since 1970. 
B)  Lorenz curve for income and the Lorenz curve for wealth are equally close to the line of equality. 
C)  Lorenz curve for income is closer to the line of equality than is the Lorenz curve for wealth. 
D)  Lorenz curve for wealth is closer to the line of equality than is the Lorenz curve for income. 
E)  None of the above answers is correct. 
A)  distribution of income has become more equal since 1970. 
B)  Lorenz curve for income and the Lorenz curve for wealth are equally close to the line of equality. 
C)  Lorenz curve for income is closer to the line of equality than is the Lorenz curve for wealth. 
D)  Lorenz curve for wealth is closer to the line of equality than is the Lorenz curve for income. 
E)  None of the above answers is correct.

Question 11

Which of the following currently helps redistribute income in the United States?
i.negative income tax
ii.progressive income taxes
iii.Social Security

Accepted Answer

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

Question 12

What are the three ways that the government redistributes income in the United States? Briefly discuss each.

Accepted Answer

The government redistributes income usin

Question 13

Differences in skills
i.can arise partly from differences in education and/or partly from differences in on-the-job training.
ii.can lead to large differences in earnings.
iii.result in different demand curves for high-skilled and low-skilled labor.

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 14

-The above table shows the distribution of income in two imaginary countries,Alpha and Beta.
a.In the figure below,draw the Lorenz curves for Alpha and Beta.
   
b.Compare the distribution of income in Alpha with that in Beta.Which distribution is more unequal?
c.What would be the distribution of income in a country with perfect income equality?

Accepted Answer

@#IMG-DLM& 
a.The Lorenz curves are above.
b.The d

Question 15

-The table above gives the average income received by each 20 percent group of households.Complete the table by finding the percentage of income earned by each group and the cumulative percentage of income.Label the figure below and then plot the Lorenz curve.

Accepted Answer

@#IMG-DLM& 
The completed tabl

Question 16

A household's income earned from the markets for factors of production and with no government redistribution is

Accepted Answer

A)  money income. 
B)  welfare. 
C)  market income. 
D)  exploitative income. 
E)  factored income. 
A)  money income. 
B)  welfare. 
C)  market income. 
D)  exploitative income. 
E)  factored income.

Question 17

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

Accepted Answer

A)  $400 per year. 
B)  $4,000 per year. 
C)  $11,900 per year. 
D)  $22,800 per year. 
E)  $35,800 per year. 
A)  $400 per year. 
B)  $4,000 per year. 
C)  $11,900 per year. 
D)  $22,800 per year. 
E)  $35,800 per year.

Question 18

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

Accepted Answer

A)  greater than or equal to 
B)  equal to 
C)  less than or equal to 
D)  greater than 
E)  less than 
A)  greater than or equal to 
B)  equal to 
C)  less than or equal to 
D)  greater than 
E)  less than

Question 19

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

Accepted Answer

A)  a higher value of marginal product. 
B)  a lower value of marginal product. 
C)  better health. 
D)  fewer deductions. 
E)  a greater supply than do low-skilled workers. 
A)  a higher value of marginal product. 
B)  a lower value of marginal product. 
C)  better health. 
D)  fewer deductions. 
E)  a greater supply than do low-skilled workers.

Question 20

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

Accepted Answer

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

The gap between the salary of Tom Cruise and an unknown actor is over $15 million per movie.This difference means that Mr.Cruise's value of marginal product is

A government redistribution of income program is proposed with the aim of making the income distribution the same as the 45° line in a Lorenz curve diagram.What implications does the idea of the "big tradeoff" have for the program?

The measured inequality of annual income the actual inequality of lifetime income because .

Which of the following is correct about the United States?

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

Comparing the wealth and income distribution in the United States,we see that

In the United States,the richest 20 percent of households receive approximately ________ percent of total money income.

Skills are costly to acquire.What forms do these costs take? i.out-of-pocket expenditures to pay for more education ii.a higher value of marginal product iii.forgone earnings while attending higher education

In the United States,the

Which of the following currently helps redistribute income in the United States? i.negative income tax ii.progressive income taxes iii.Social Security

What are the three ways that the government redistributes income in the United States? Briefly discuss each.

Differences in skills i.can arise partly from differences in education and/or partly from differences in on-the-job training. ii.can lead to large differences in earnings. iii.result in different demand curves for high-skilled and low-skilled labor.

-The table above gives the average income received by each 20 percent group of households.Complete the table by finding the percentage of income earned by each group and the cumulative percentage of income.Label the figure below and then plot the Lorenz curve.

A household's income earned from the markets for factors of production and with no government redistribution is

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

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

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 gap between the salary of Tom Cruise and an unknown actor is over $15 million per movie.This difference means that Mr.Cruise's value of marginal product is

A government redistribution of income program is proposed with the aim of making the income distribution the same as the 45° line in a Lorenz curve diagram.What implications does the idea of the "big tradeoff" have for the program?

The measured inequality of annual income ________ the actual inequality of lifetime income because ________.

Which of the following is correct about the United States?

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

Comparing the wealth and income distribution in the United States,we see that

In the United States,the richest 20 percent of households receive approximately ________ percent of total money income.

Skills are costly to acquire.What forms do these costs take? i.out-of-pocket expenditures to pay for more education ii.a higher value of marginal product iii.forgone earnings while attending higher education

In the United States,the

Which of the following currently helps redistribute income in the United States? i.negative income tax ii.progressive income taxes iii.Social Security

What are the three ways that the government redistributes income in the United States? Briefly discuss each.

Differences in skills i.can arise partly from differences in education and/or partly from differences in on-the-job training. ii.can lead to large differences in earnings. iii.result in different demand curves for high-skilled and low-skilled labor.

-The table above gives the average income received by each 20 percent group of households.Complete the table by finding the percentage of income earned by each group and the cumulative percentage of income.Label the figure below and then plot the Lorenz curve.

A household's income earned from the markets for factors of production and with no government redistribution is

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

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

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 measured inequality of annual income the actual inequality of lifetime income because .

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