Question

1. Consider a retiree who is currently receiving Social Security benefits. Which of the following is true about the benefits?

• The benefits are being paid for with the interest earned on the past contributions of this retiree.

• The benefits are being paid for with the past contributions of this retiree.

• The benefits will be paid for with the future contributions of future workers.

• The benefits are being paid for with the contributions of current workers.

2.A firm will hire workers until the

• marginal revenue from hiring an additional worker is maximized.

• marginal revenue from hiring an additional worker is zero.

• marginal revenue from hiring an additional worker falls below the marginal cost.

• average revenue from hiring an additional worker is zero.

The 80/20 ratio is found by dividing the

Multiple Choice

• average income of the top 80 percent of income earners by the average income of the top 20 percent of income earners.

• number of households making less than 80 percent of the poverty line by the number of households making more than 20 times the poverty line.

• average income of those below the 80th percentile by the average income of those in the top 20 percent.

• income at the 80th percentile by the income at the 20th percentile.

Answer 1

1).

Usually people get the benefits of social security benefit for its past contribution, => the correct answer is “B”.

2).

Now, usually firms take the decision to hire a worker depending on “MR” of hiring worker and “MC” of hiring worker, => if “MR > MC”, => the firm will hire the worker and if “MR < MC”, => the firm will not hire the worker. So, here the correct answer is “C”.

3).

Now, “80/20 ratio” is a measure of income inequality is “80^th percentile” income earners by “20^th percentile”, => the correct answer is “D”.