Question

1. Some economists feel that: a.there will always be inequality in a market system, because people...

1. Some economists feel that:

a.there will always be inequality in a market system, because people will always make poor choices.

b. Most economists would agree with one or more of these theories.

c.the shift toward freer markets around the world has widened inequalities.

d.the shift toward greater economic growth around the world has widened inequalities.

2. Economic discrimination is one of the causes of income inequality. False/True

3. The Lorenz curve for wealth in the United States:

a.has a Gini coefficient of 1.

b.lies to the left of the Lorenz curve for income.

c.lies to the right of the Lorenz curve for income.

d.exhibits a more equal distribution than that for income.

4. Equilibrium for a network good is at the intersection of the downward-sloping portion of the network demand curve and the marginal cost curve. True/False

5. Wage rates are generally kept undisclosed within a competitive labor market. True/False

Homework Answers

Answer #1

1> d.the shift toward greater economic growth around the world has widened inequalities.

Many economists believe that there is a tradeoff between equality and equity. Thus, a greater economic growth comes with lesser equality in distribution.

2> True

Economic discrimination tends to be done towards the poorer section of the society, thus it is true.

3> c.lies to the right of the Lorenz curve for income.

Wealth inequality is higher in the US than income inequality, thus the lorentz curve for the wealth will lie to the right of the income.

4> True

For a network good, the marginal benefit of network increases first and then diminishes. Thus, the equilibrium would be at the intersection of the network demand curve and marginal cost curve.

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