Question

1.A company has two locations where it employs workers doing the same job and working the same hours. Other things the same most workers would prefer to live in location A, but location A has a higher cost of living than location B.

a. The company likely needs to pay workers in location A more.

2.

The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.

Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

a. Utilitarians, because they want to maximize the utility to the worst-off person in society

b. Liberals, because of the maximin criterion

c. Libertarians, because they believe in diminishing marginal utility

d. All three groups would be equally in favor of the switch.

b. The company likely needs to pay workers in location B more.

c. It’s not clear if the company would need to pay more to workers in location A or location B.

d. The company must pay workers the same amount.

3.

Economic mobility in the United States is so great that fewer than

a. 3 percent of families are poor for 8 or more years.

b. 5 percent of families are poor for 8 or more years.

c. 8 percent of families are poor for 8 or more years.

d.

10 percent of families are poor for 8

4.

Figure 18-3

Refer to Figure 18-3. What is the marginal product of the third worker?

a. 2 units

b. 4 units

c. 4.67 units

d. 14 units

5.

In empirical analyses of factors that help explain wages,

a. effort and ability are not likely to contribute to large differences in wages in the U.S. economy.

b. economists typically find that measurable factors explain less than half of the variation in wages.

c. economists typically find few factors that are not explicitly measurable.

d.

unmeasurable influences on wage differences are found to be quite small.

6.

Figure 20-3

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Refer to Figure 20-3. In 1968, the percent of elderly aged 65 and over in poverty is

a. higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.

b. higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty.

c. lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.

d. is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty.

7.

Governments enact policies to

a. make the distribution of income more efficient.

b. make the distribution of income more equal.

c. maximize the use of the welfare system.

d.

minimize the use of in-kind transfers.

8.

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

a. will survive if they increase production and garner a larger market share.

b. will eventually earn zero economic profits.

c. will survive as long as they are willing to have a smaller market share.

d. are likely to eventually go out of business.

Answer 1

1)a.The company likely needs to pay workers in location A more.

2) c.)Libertarians, because they believe in diminishing marginal utility

3) a) 3 percent of families are poor for 8 or more years.

4) The figure is not given but it refers to additional output obtained by employing an additional worker

5) b.)economists typically find that measurable factors explain less than half of the variation in wages.

6 b.)make the distribution of income more equal.

7 b) higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty.

8) d.) are likely to eventually go out of business.