MicroEcon - Income Distribution

This table shows the quantity demanded and supplied in the labor market for driving city buses in the town of Unionville, where all the bus drivers belong to a union. What would the equilibrium wage and quantity be in this market if no union existed?

$18 per hour, 8,000 bus drivers

Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the second-to-bottom quintile of this income distribution is

11.6%

Imagine an economy of 10 individuals. Their annual incomes are reported below. Approximately what percentage of this economy's income is held by the poorest 40% of the population?

18.6

Which of the following will NOT result in a leftward shift of the market demand curve for labor?

An increase in immigration An increase in the wage rate

When wages and work conditions are agreed upon by business owners and workers, the process is called?

Collective bargaining

The image below shows what?

Distribution of income among groups of people.

To minimize the cost of producing a given level of output in the long run, a firm must:

Follow the marginal decision rule and equate the ratio of marginal product to price for all factors of production.

Wages are what?

Income that results from labor input

What is the the image below?

Lorenz Curve

A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the bottom quintile of this income distribution is

NOT 7.5%, 9.5%

If a rise in incomes for both low-income and high-income workers is higher for the high-income workers,

NOT then poverty will fall and inequality will fall.

In which of the following pairs of terms are both items incomes earned for factors of production?

NOT wages and resources

Which of the following best describes the line of perfect income inequality in a Lorenz curve?

The line of perfect income inequality is at 0 degrees, because one person has all the wealth.

Imagine an economy of 10 individuals. Their annual incomes are reported below. Imagine that $100 of Oprah's income is transferred to Anna. What is true?

The richest 20% of the population's income share falls from about 32.2% to about 30.5%. The poorest 20% of the population's income share grows from about 5.0% to about 6.8%.

Given that labor and capital are the only two factors of production for a given firm. If the price of labor rises, the firm will shift to a factor mix that uses more ________ ; as a result, we say that the firm is becoming more________.

capital : capital intensive

Negotiations between unions and a firm or firms is called ________ .

collective bargaining

The labor ________ curve(s) will shift ________ if there is an increase in productivity or an increase in the demand for the final product.

demand : right

A Lorenz curve shows:

how a population's total income is distributed among its members.

A situation of ________ arises when one group receives a higher share of total income or wealth than others.

inequality

Incomes are received from several sources. Of the following, which is the largest?

labor

A ________ is an organization of workers that negotiates with employers as a group over wages and working conditions.

labor union

Other things being equal, a ________ supply of workers tends to put ________ pressure on real wages.

larger : downward

Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high-income workers such as farm technicians and farm owners. This new technology will shift the demand curve for low-income workers to the ________ while shifting the demand curve for high-income workers to the ________.

left ; right

A market in which there is only one buyer of a good, service, or factor of production is called a

monopsony

Incomes rise for low-income and high-income workers, but rise more for the high-income earners. How will this change affect income inequality?

poverty falls, inequality rises

When reference is made to the ________, it means the specific amount of income needed for a basic standard of living.

poverty line

A higher wage has an income and a substitution effect. Based on the ________, a higher wage for labor leads to a higher quantity of labor supplied.

substitution effect

If a rise in incomes is the same proportion for both low-income and high-income workers,

then poverty will fall and inequality will fall

A Lorenz curve graphic shows:

what perfect equality of the income distribution looks like compared to the actual income distribution.