Smartwork CH 15

Suppose that the average income of a typical person in the richest 20% of citizens of Japan is $165,000. What is the average income of a person who is among the poorest 20% of citizens in Japan? (Round to the nearest dollar.) (if the income ratio is 5.4)

30556

Suppose that the income of the average person among the poorest 20% of citizens in Namibia is $2000. What is the average income of a person who is among the richest 20% of citizens in Namibia? (Round to the nearest dollar.) (the inequality ratio is 19.6)

39200

Which of the following statements are true?

A more desirable job might entice you to accept a lower wage. The location of a job might entice you to accept a lower wage. Working for a particular cause might cause you to accept a lower wage.

Which of the following is a benefit of a college education?

Benefit of college higher marginal productivity higher wages greater human capital signals to potential employers the ability to learn quickly and perform well under stress Not a benefit greater debt stronger union protections greater physical capital

Which of the following are potential problems with using the minimum wage as a poverty-fighting tool?

Employers might shift to more capital-intensive production because labor is relatively more expensive. Fewer low-income workers will be employed.

Which of the following are necessary conditions needed to achieve income equality?

Every job would have to be equally attractive. All workers would have to be perfectly mobile. Every worker would have to have the same skills, ability, and productivity.

What effect would doubling the minimum wage have on income inequality?

It depends on how the higher minimum wage affects the equilibrium in the labor market.

Suppose that for years, society had restricted the economic opportunities of blond-haired persons to jobs in education, while brown- or black-haired persons could work any job.Now suppose that blond-haired persons are allowed to work any job they like. What effect would this change have on the wages of blond-haired persons and brown- or black-haired persons over time?

The wage for blond-haired workers will increase and the wage for brown- or black-haired workers will decrease.

The income inequality ratios in England and in Bolivia are roughly the same. What can explain this finding?

There are many extremely rich people in England, and there are many extremely poor people in Bolivia.

York community has 10 residents: five who earn $100,000 and five who earn $40,000. Jersey community also has 10 residents: five who earn $90,000 and five who earn $40,000.

What is the income inequality ratio for York? 2.5 What is the income inequality ratio for Jersey? 2.25 The average income in York is higher than Jersey. The people in York experience more income inequality compared to residents of Jersey.

Consider two communities. In Mill Town, two families earn $60000 each, six families earn $75,000 each, and two earn $80,000 each. In Pasture Town, four families earn $50,000 each, four families earn $75000 each, and two earn $100000 each.

What is the income inequality ratio in Mill Town? 1.3 What is the income inequality ratio in Pasture Town? 2 Which community has the more unequal distribution of income? Pasture Town is more unequal because its ratio of the top 20% to the bottom 20% is higher.

Suppose that society restricted the economic opportunities of blue-eyed persons to jobs in construction, while brown- or green-eyed persons could work any job they choose.

Would wages in construction be higher or lower than wages for other jobs? Wages would be lower in construction jobs. Because the supply of workers in construction jobs will be much higher than in all other jobs, the wage will be lower. Would brown- or green-eyed workers make more or less than blue-eyed workers? The brown- or green-eyed workers would make more. The brown- or green-eyed workers will have more employment opportunities, so they will seek more lucrative careers than construction, where the supply of labor is artificially high.

Which of the following policy actions do the authors propose to offset the negative consequences of rising income inequality?

a relatively modest boost in the historical growth rate of government redistributive transfers modestly higher average tax rates

Internships are considered a vital stepping stone to full-time employment after college, but not all internship positions are paid. Suppose you have to decide between taking an unpaid summer internship in your field of study, or working at a factory for the summer earning $10 an hour. If you take the factory job for the summer, what is included in your opportunity cost?

gaining valuable experience and increasing your human capital networking with professionals in your field of study

The United States has attracted many highly productive immigrants who work in fields such as education, health, and technology. These workers have high marginal products of labor, which, therefore, cause the degree of income inequality in the United States to

increase

Which of the following may help to explain the underlying causes of income inequality?

labor union decline globalization rise of stock option-based executive compensation skill-based technological change

Why would a profit-maximizing firm pay its workers more than what workers are paid at other firms in the same market?

to decrease employee turnover to provide an incentive for workers to reduce slacking to increase worker productivity